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AT&T asks court to dismiss Sprint, Cellular South lawsuits

By Bloomberg News

POSTED:
LAST UPDATED: 04:16 a.m. HST, Oct 01, 2011



AT&T Inc. (T) urged a court to dismiss Sprint Nextel Corp. and Cellular South Inc. lawsuits alleging its proposed purchase of wireless carrier T-Mobile USA Inc. would be anticompetitive, saying the deal would actually boost competition.

AT&T asked a federal judge in Washington yesterday to throw out the suits, claiming Sprint, the third-biggest U.S. wireless operator, and Cellular South, the ninth-largest wireless carrier by customers, failed to show the deal would hurt competition or impair access to networks needed to serve their customers.

“Sprint knows that competition will be enhanced, not harmed, by the combination of AT&T and T-Mobile and that a post-merger AT&T -- freed of spectrum shortages that impair its ability to offer customers better services at lower prices -- will be a more formidable competitor,” AT&T said in its filing in the Sprint case. “What is good for consumers is bad for Sprint, and that is why Sprint has filed suit.”

AT&T said in a filing in the Cellular South case that the competitive concerns raised by the Ridgeland, Mississippi-based company weren’t legitimate. AT&T offered as evidence a March 21 e-mail from Hu Meena, Cellular South’s president and chief executive officer, proposing an agreement between the two companies on issues such as spectrum and roaming access.

‘Fears’ Competition

“Cellular South suggested that it would not oppose the merger if AT&T would agree not to engage in facilities-based competition in Mississippi,” AT&T said in its filing. “This inappropriate proposal confirms that what Cellular South fears is competition, not lack of competition.”

Sprint brought its antitrust lawsuit on Sept. 6, less than a week after the U.S. sued to block the deal, saying the proposed merger would harm consumers and weaken Sprint’s ability to compete with AT&T and Verizon Communications Inc. (VZ)

Cellular South sued on Sept. 19 claiming the merger “threatens to substantially lessen competition” and cause it significant losses and damages. Cellular South changed its name to C Spire Wireless on Sept. 26, according to its website.

The Justice Department sued Dallas-based AT&T and Bonn- based Deutsche Telekom AG (DTE)’s T-Mobile unit on Aug. 31, arguing a combination of the two companies, which would make AT&T the biggest U.S. wireless carrier, would “substantially” reduce competition. Seven states and Puerto Rico joined the government’s case.

‘Distort’ Record

“AT&T’s accusations flatly distort the record,” said Eric Graham, vice president of strategic & government relations for C Spire Wireless. “In the days surrounding the announcement of AT&T’s takeover of T-Mobile, AT&T approached us in an effort to gain our support. Mr. Meena raised the same issues that we have articulated for years.

“In typical fashion, AT&T declined to address those issues and we moved on,” Graham said in an e-mailed statement. Meena never suggested that AT&T not compete in Mississippi or anywhere else, he said.

Vonya B. McCann, senior vice president of government affairs for Overland Park, Kansas-based Sprint, said in an e- mailed statement that AT&T’s motion was without merit.

AT&T said Sprint’s argument that the transaction will limit its access to services including roaming and so-called backhaul, or the networks used to move calls and data between cell towers that communicate with mobile phones, is flawed.

‘Implausible and Speculative’

“Sprint does not purchase roaming services from either AT&T or T-Mobile -- its network is technologically incompatible,” AT&T said in yesterday’s filing. “The transaction will therefore have no impact on Sprint’s ability to obtain roaming prices.” Sprint’s claim that the transaction will induce Verizon to raise its rates for roaming is “implausible and speculative,” AT&T said.

AT&T also said that Sprint fails to back up its allegations that the transaction will eliminate T-Mobile as an important purchaser of backhaul, or special access services, which are primarily provided by AT&T and Verizon.

“The immediate impact of any supposed reduction in demand for special access as a result of the merger would be to reduce the prices that Sprint pays for special access, not to increase them,” AT&T said in the filing. “That reduction in prices would benefit Sprint and would not constitute antitrust injury.”

Sprint’s case is Sprint Nextel Corp. (S) v. AT&T Inc., 11-cv- 01600, U.S. District Court, District of Columbia (Washington). Cellular South’s case is Cellular South Inc. v. AT&T Inc., 11- cv-01690, U.S. District Court, District of Columbia (Washington). The government’s case is U.S. v. AT&T Inc., 11-cv- 01560, U.S. District Court, District of Columbia (Washington).







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