Cellular South, Seven States Sue to Stop ATandT, T-Mobile Merger

By Wayne Rash  |  Posted 2011-09-20 Print this article Print

News Analysis: Regional carrier Cellular South has filed an antitrust lawsuit seeking to stop the AT&T, T-Mobile merger as seven state attorneys general join the Department of Justice case.

Cellular South, the largest privately held wireless carrier in the United States, has become the latest telecommunications company to file an antitrust suit in the U.S. District Court for the District of Columbia seeking to stop the merger of AT&T and T-Mobile.

Cellular South is based in Mississippi, Alabama, Tennessee and the panhandle of Florida. The carrier provides CDMA coverage on its own network, and GSM coverage in the Huntsville, Ala., home of a major NASA facility.

In addition, the state attorneys general from New York, Washington, California, Illinois, Massachusetts, Ohio and Pennsylvania joined the Department of Justice lawsuit on Sept. 16. "Our review of the proposed merger between AT&T and T-Mobile has led me to conclude that it would hinder competition and reduce consumer choice," California Attorney General Kamala D. Harris said in a statement announcing that her state had joined the DOJ suit.

"Enforcement of antitrust law is the responsibility of the [state] Attorney General and is vital to protecting our state's economic strength and tradition of innovation for the betterment of all Californians," Harris said.

New York's attorney general, Eric Schneiderman, said in a statement that the merger would stifle competition and eliminate low-cost options for wireless service. The attorneys general for 11 other states have publicly supported the merger.

The Cellular South suit, filed on Sept. 19, is focused on the potential for harm, and perhaps extinction of regional carriers, if the merger is allowed to go forward. Among other points, the complaint says that regional carriers would be unable to get the latest wireless devices in a timely fashion and at a reasonable cost because of the market dominance of the two largest carriers, AT&T and Verizon Wireless.

The complaint also says that Cellular South and other regional carriers would be forced to pay higher roaming prices, assuming that they could get roaming agreements at all. Furthermore, consumers would be forced to pay higher prices and have less innovation, fewer choices and reduced competition, the complaint said.

A spokesman for Cellular South told eWEEK that their antitrust lawsuit is intended to raise the court's awareness of the impact on regional carriers. Cellular South has almost 900,000 customers and has CDMA roaming agreements with both Verizon Wireless and Sprint. Cellular South is in the process of starting a Long Term Evolution (LTE) build-out primarily in its rural markets, something that AT&T is promising but is saying can't be done without the merger with T-Mobile, which serves primarily urban areas.

Cellular South's complaint also notes that the Federal Communications Commission has failed to call the wireless market in the United States competitive during its last review and that the company believes that the market has actually become less competitive.

Wayne Rash Wayne Rash is a Senior Analyst for eWEEK Labs and runs the magazine's Washington Bureau. Prior to joining eWEEK as a Senior Writer on wireless technology, he was a Senior Contributing Editor and previously a Senior Analyst in the InfoWorld Test Center. He was also a reviewer for Federal Computer Week and Information Security Magazine. Previously, he ran the reviews and events departments at CMP's InternetWeek.

He is a retired naval officer, a former principal at American Management Systems and a long-time columnist for Byte Magazine. He is a regular contributor to Plane & Pilot Magazine and The Washington Post.

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