By Brendan Sasso - 12/20/11 04:13 PM EST
The Justice Department and the Federal Communications Commission (FCC) celebrated AT&T's decision on Monday to abandon its planned $39 billion purchase of T-Mobile in the face of opposition from both agencies.
“Consumers won today," Sharis Pozen, chief of the Justice Department's antitrust division, said. "Had AT&T acquired T-Mobile, consumers in the wireless marketplace would have faced higher prices and reduced innovation. We sued to protect consumers who rely on competition in this important industry. With the parties’ abandonment, we achieved that result.”
AT&T wanted to buy T-Mobile in part to gain access to T-Mobile's cellular airwaves. The deal would have helped AT&T relieve congestion on its crowded network.
AT&T also argued the merger would allow it to make investments that would have created jobs.
But the Justice Department sued to block the deal in August, arguing the merger of the second- and fourth-largest wireless carriers would have stifled competition. If the deal had been approved, AT&T and Verizon would have controlled about 80 percent of the wireless market.
As AT&T and T-Mobile geared up to defend their deal in the courtroom, the FCC took its own step toward killing the deal. Last month, FCC Chairman Julius Genachowski recommended holding a months-long administrative hearing to review it, saying he was unconvinced it would benefit the public.
The FCC agreed with the Justice Department that the merger would have reduced competition and also rejected AT&T's argument that the deal would be a job-creator. The FCC concluded the combined company would likely lay off thousands of workers.
“The FCC is committed to ensuring a competitive mobile marketplace that drives innovation and investment, creates jobs and benefits consumers," FCC Chairman Julius Genachowski said on Monday. "This deal would have done the opposite."
In a news release on Monday, AT&T said that if it cannot gain access to more airwaves, "customers will be harmed and needed investment will be stifled."
AT&T CEO Randall Stephenson promised AT&T will continue to invest in its network and urged Congress to pass legislation to free up more airwaves, or spectrum, for mobile devices.
Genachowski said he agreed that Congress should give the FCC the authority to auction spectrum to cellphone carriers.
"The U.S. mobile industry leads the world in mobile innovation, and we agree with AT&T that Congress should pass incentive auction legislation that will unleash new spectrum for mobile broadband," he said.