Was AT&T really blindsided by DOJ lawsuit?

Lynnette Luna
It seems we were all blindsided by the Justice Department's move to file a lawsuit in federal court yesterday to stop AT&T's (NYSE:T) proposed $39 billion acquisition of T-Mobile USA. After all, you would think a lobbying force like AT&T had a grip on the pulse of the Justice Department and the FCC.  

Nevertheless, there have been signs that haven't boded well for AT&T, and some of them were its own doing. One notable incident: An AT&T lawyer reportedly accidentally leaked confidential information earlier this month that the company claimed was consistent with its previous filings. However, the document showed that AT&T figured it would cost about $3.8 billion to bring its LTE coverage from 80 percent to 97 percent of the U.S. Of course, one of the big reasons AT&T has cited for paying $39 billion to acquire T-Mobile is to expand LTE to 97 percent of the population.

T-Mobile's own marketing, it appears, has become another stumbling block. In its complaint, the Justice Department cites a T-Mobile document in which the operator touts its significant number of "firsts" in the U.S. mobile wireless industry, including the first handset using the Android operating system, BlackBerry wireless email, the Sidekick, national Wi-Fi hotspot access, and a variety of unlimited service plans. T-Mobile was also the first company to roll out a nationwide HSPA+ network. Last week, T-Mobile introduced an aggressive enterprise offering. Meanwhile, we haven't seen much innovation on the pricing side coming from AT&T.

T-Mobile customers aren't too wild about the idea either. A poll back in May revealed that T-Mobile customers don't savor becoming AT&T subscribers.

AT&T found itself earlier this month filing eight federal lawsuits aimed at stopping a law firm's attempt to block its proposed acquisition. The law firm, Bursor & Fisher, filed arbitration cases in eight jurisdictions across the U.S. aiming to stop the deal, contending the deal is in violation of the Clayton Antitrust Act and hurts competition. The action is designed to represent customers who want to legally challenge the acquisition. And of course there are the multitudes of consumer advocates and competitors that have opposed the deal.

What happens now is anyone's guess, but it appears AT&T might have to make some mighty concessions, especially since the FCC is also concerned about the deal's impact on competition. --Lynnette

P.S. In observance of the Labor Day holiday, FierceBroadbandWireless will not publish on Monday, Sept. 5. Look for the issue in your inbox on Sept. 6.