Government Officials Hit the “Hold” Button on AT&T, T-Mobile Merger

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The $39 billion merging proposal between No. 2 wireless carrier AT&T and No. 4 carrier T-Mobile has been blocked after The Justice Department deemed it costly for consumers.

Government officials argue the proposal would greatly reduce competition and increase cost for consumers. Something CEO of No. 3 carrier Sprint, Dan Hesse agrees with, saying during a speech at the Commonwealth Club in San Francisco, “Competition will be stifled, growth will be stifled, and wireless innovation will be jeopardized.” He went on to say, “We just can’t let that happen.”

Not everyone is against this proposal. Large organizations such as AFL-CIO and the NAACP expressed their support for the merge with politicians getting in on the action. Rep. Lamar Smith (R-Texas) said that the proposed merger could greatly benefit consumers by helping to spur innovation, as well as create new jobs. At this time 26 governors, 92 mayors, and 11 state attorneys general had also announced their support for the deal.

AT&T now has the opportunity to dispute the block. If the merge ultimately fails, T-Mobile will walk away with three billion dollars in cash, which is the sum AT&T pledged to pay if regulators reject the transaction. Then there are reduced charges T-Mobile USA would get for calls that get tunneled through the AT&T network. Finally, Deutsche Telekom-owned carrier, the fourth largest in the U.S., would also receive the luxury of AT&T’s wireless spectrum in some regions, resulting in better coverage for users on the T-Mobile network.