AT&T's Legal Challenges in T-Mobile Acquisition

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AT&T will have to pay Deutsche Telekom $3 billion penalty if its acquisition is not approved by the US government. Its acquisition of T-Mobile will result in a duopoly in the US mobile telecom market. AT&T and Verizon will dominate the industry and this raises anti-trust concerns. How will this affect consumer prices and the degree of innovation in the market?

AT&T must feel confident that it can overcome those objections. It will follow the traditional method for overcoming anti-trust objections. They will redefine the market as a system of local markets in which there are more than two competitors in each local market. That is, the national market share of the duopoly is not the relevant way to look at the market. They will also argue that only large providers can provide the level of customer service and access the broadband spectrum that is necessary to meet the national goal of wireless internet service everywhere. They must also be prepared to make some concessions in order to appease regulators. They may have to allow virtual mobile operators access to their network to provide services as well.