Why Would the Federal Government Sue AT&T to Stop Purchase of T-Mobile?

When I read earlier that the Department of Justice is suing AT&T to keep them from taking over T-Mobile I thought it was kind of weird. Especially after reading Ed Morrissey’s post pointing out how the voluntary merger would create American jobs, and make the T-Mobile subsidiary of Deutsch Telekon GE (DTE) an American company. Plus, blocking the merger could cost AT&T billions of dollars.

The federal government’s position is that should AT&T take over T-Mobile, they will have an unfair advantage over the competition. But as Neil Stevens pointed out, there would still be plenty of competition out there, the move would simply allow AT&T to offer better service to more customers. Well, thanks to Stevens, the reason for the suit is a bit more clear. It’s all about the administration helping friends of Obama.

Where does Obama come in? In 2009, [R. Gerard] Salemme took time off from his job at Clearwire to join the Barack Obama transition team. One project of his was digital television transition issues, where he promoted the famous delay in the DTV transition. You see, the longer the DTV delay took, the longer it would be before Verizon Wireless could get its hands on the “C Block” of spectrum to aid its own 4G rollout, in order to compete with Clearwire’s network.

So the Obama administration took action, dragging its feet on DTV, in a way that hindered 4G competition. Salemme’s employer stood to benefit. Big surprise!

The time has now come for Clearwire’s 4G competition to be expanded further, as AT&T seeks to get ahold of T-Mobile’s spectrum, to allow it to roll out 4G wireless to over 95% of Americans. So naturally, the Obama DoJ is seeking to stop that from happening.

Ladies and gentlemen, enjoy your Hope and Change in the new Culture of Corruption.

Be sure to read the whole thing for the back story on Salemme and his connections to the Obama administration and AT&T’s competitors.

Update: Here are statements from TechFreedom:

The following statement can be attributed to Larry Downes, Senior Adjunct Fellow of TechFreedom, regarding this lawsuit:

The Justice Department’s decision is surprising and disappointing. The Department’s sensible merger guidelines, had they been applied, would have found the deal a great benefit to consumers at the local level, where mobile services are bought and used. The Department has instead untethered itself from rational analysis, inviting more delay and the potential to interrupt the mobile revolution, one of the few bright spots in the economy. Those hoping for real competition in the critical 4G LTE market will have to wait.

The following statement can be attributed to Berin Szoka, President of TechFreedom:

The DOJ has missed the forest for the trees. Neither company has the spectrum to offer a viable 4G LTE service. Only by combining their spectrum can the two companies compete effectively with Verizon’s LTE service. Such services could also compete with traditional ISPs who provide home broadband access.

The real problem here is outdated central planning of spectrum. This merger was in part an attempt to overcome government mismanagement of the most vital resource of the digital economy. By blocking the deal, the DOJ is compounding harmful government meddling in the digital economy.

Thus, ironically, in the name of protecting consumers, the DOJ ultimately will deny them meaningful choices in high-speed mobile broadband services.

Tags: AT&T, corruption, cronies, DOJ, Gerard Salemme, obama, sues, T-Mobile