Lawyers for AT&T are scheduled to appear before Judge Ellen Segal Huvelle on Monday afternoon to convince her to dismiss Sprint’s antitrust challenge to the acquisition of T-Mobile. A dismissal would simplify AT&T’s fight for merger approval by allowing the telecom giant to focus on beating back the government’s separate antitrust challenge. AT&T’s motion to dismiss Sprint’s lawsuit focuses on the issue of standing. AT&T argues that antitrust laws are designed to protect consumers, not competitors such as Sprint. And the firm also pours cold water on Sprint’s specific claims about the merger’s anticompetitive effects. For example, Sprint contends that the merger would raise its roaming costs, but AT&T notes that AT&T and T-Mobile have chosen wireless communications standards that are incompatible with Sprint’s own network, so Sprint wasn’t buying roaming services from AT&T and T-Mobile in the first place. Sprint had also argued that the merger would also allow AT&T to raise its prices for backhaul. These are the wires and cables Sprint leases from competitors, including AT&T, to connect its cell towers with its own network. But AT&T notes that T-Mobile is not a significant player in the backhaul business, and that a combined AT&T-Mobile would therefore have no more market power in the backhaul market than AT&T does right now. Sprint contends that AT&T is missing the forest for the trees. The cellular business depends crucially on market power: the more customers a firm has, the stronger its bargaining position is with partners such as handset suppliers, backhaul providers, and the operators of other networks. Sprint worries that the merger will give AT&T so much market power that it will create a de facto AT&T-Verizon duopoly, leaving smaller firms such as Sprint and Cellular South with too few customers to compete effectively. For example, Sprint suggests that the new, larger, AT&T will have a greater capacity to negotiate exclusive contracts for the latest handsets-agreements that could leave Sprint out in the cold. Monday’s hearing in Washington, DC, will determine whether Sprint gets to participate in the case against AT&T. But either way, the government’s case against AT&T is scheduled to go to trial on February 13. Read the comments on this post
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