Regional Wireless Services Cut Off From Latest Handsets

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


"In its annual report to Congress on the state of competition in the wireless industry in May 2010, the Federal Communications Commission, unlike the same reports it generated for the previous six years, failed to find that the wireless industry was competitive," Cellular South said in its complaint. "If the proposed merger is not blocked, the already concentrated and 'uncompetitive' wireless industry will be dramatically and irreparably changed-for the worse. The nation and its millions of wireless customers will be left to the mercy of the Big Two-AT&T and Verizon-and all of the harm that such a duopoly will create."

One early indicator of the restrictions caused by being a small player surrounded by giants is the inability to sell certain high-demand devices, such as the Apple iPhone. "AT&T and Verizon have already exercised their power when purchasing devices to cause manufacturers of devices to sell devices only through AT&T and Verizon-thus ensuring that only AT&T and Verizon have access to devices on a timely and economically feasible basis," Cellular South said in its complaint.

"AT&T and Verizon have accomplished that goal through contracts and agreements with device manufacturers that bind manufacturers not to sell current devices to other competitors. Cellular South and other carriers have often been refused access to current devices and given access only when the device is no longer the most current model," noted the complaint.

Sprint, which has filed its own antitrust suit against the AT&T, T-Mobile buyout, is cheering Cellular South along. "Today Cellular South stands with the U.S. Department of Justice, seven state Attorneys General and Sprint in asking the Courts to protect American consumers from the harms to competition, innovation, and pricing that likely would result if AT&T is allowed to take over T-Mobile," Sprint's Senior Vice President of Government Affairs Vonya McCann said in a statement. "As this growing chorus of opposition shows, this proposed transaction violates antitrust law and is not in the best interests of consumers and the American economy."

While there are no sure things in antitrust lawsuits, the entry of Cellular South adds a new level of complexity that will likely make it extremely difficult for AT&T to defeat these multiple antitrust actions and win government approval of the merger.

The suit presents a set of new arguments that AT&T and Deutsche Telekom will have to address in court. Perhaps more important, it makes it almost impossible for the Department of Justice to drop the suit, even if the court were to agree that the DOJ could settle or otherwise withdraw its suit.

Not only would the DOJ have to request that the court agree to a settlement, but the state AGs, Sprint and Cellular South would have to concur with a settlement. Sprint has already said that it won't settle for anything but an end to the merger. Cellular South hasn't said where it stands on a settlement, but the arguments in its complaint make it unlikely that it would agree to any settlement that would allow the merger to go forward. 

Wayne Rash Wayne Rash is a Senior Analyst for eWEEK Labs and runs the magazineÔÇÖs 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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