T-Mobile lawsuit's court date just the beginning of AT&T-Justice feud

AT&T will appear in court on Wednesday to discuss the possibility of settling the Justice Department’s lawsuit to block the firm’s proposed acquisition of T-Mobile USA, but a disagreement over the trial date is just the first hurdle the firm will have to clear to gain approval for the transaction.

The Justice Department, which has been joined in its case by seven states, including New York, California and Pennsylvania, filed a status report on Friday showing the two sides have agreed on most details but remain divided on a trial date. AT&T has indicated its desire to reach a resolution on the matter as quickly as possible, and proposed the trial begin Jan. 16. The Justice Department has asked for the case to start on March 19. The sides are prepared to address their divide on Wednesday in court.

“As we have said, we are working on parallel paths regarding the DOJ’s complaint. We have been and remain interested in a solution that addresses the DOJ’s issues,” said an AT&T spokesman. “At the same time, we are participating in the legal process, which is reflected in today’s filing.”

The firm has said it plans to both litigate the case and attempt to reach a resolution the government would find palatable. Even if the Justice Department were ultimately to sign off on the deal, it would still need approval from the Federal Communications Commission, which has the power to block the license transfer if it finds the deal contrary to the public interest.

AT&T said it remains confident its pledge to deploy next-generation wireless broadband and to bring 5,000 call center jobs back to the U.S, along with better service, will convince regulators the deal is in the public interest. But the opposition, which includes public interest groups and rival Sprint, has been buoyed by the Justice Department’s lawsuit, and argued that many of the promised benefits are speculative at best.

In hopes of resolving critics’ argument that the merger will harm competition in the wireless market, AT&T has reportedly approached smaller rivals — including MetroPCS, Sprint and others — to gauge their interest in buying assets such as spectrum and subscribers. Experts have suggested AT&T could divest portions of T-Mobile in order to gain approval for the transaction; the deal as proposed would leave AT&T as the largest wireless carrier, with Verizon Wireless in second place and Sprint a distant third.

AT&T has a strong incentive to pursue the deal, thanks to a $3 billion breakup fee it would be forced to pay T-Mobile if the merger is blocked, along with spectrum and roaming agreements worth billions in their own right. T-Mobile parent company Deutsche Telekom has repeatedly emphasized that it lacks the resources to build out its 4G network in the U.S. and compete, making a takeover inevitable. If the deal is blocked, many believe Sprint, which had expressed interest in T-Mobile previously, could ultimately wind up purchasing the firm.

This story was posted at 2:47 p.m. and updated at 7:50 p.m.

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