States join feds in opposing AT&T's T-Mobile buy

Seven states have hopped on the growing bandwagon of opponents of AT&T's planned acquisition of T-Mobile USA.

The attorneys general of California, Illinois, Massachusetts, New York, Ohio, Pennsylvania, and Washington today joined the U.S. Department of Justice's lawsuit to block the deal between AT&T and T-Mobile.

The participation of the states adds another dose of uncertainty to a deal that is already teetering on the edge of collapse. The Justice Department's decision to oppose the merger has thrown AT&T for a loop, leaving the telecommunications giant scrambling to save the deal and rally supporters to its cause.

"In vulnerable upstate communities, where concentration in some markets is already very high, and in New York City's information-intensive economy, the impact this merger would have on wireless competition, economic growth, and technological innovation would be enormous," New York Attorney General Eric Schneiderman said in a statement.

"The proposed merger would create highly concentrated markets in Massachusetts and could lead to higher prices and poorer service," said Massachusetts Attorney General Martha Coakley.

"It is not unusual for state attorneys general to participate in DOJ merger review proceedings or court filings," said an AT&T representative. "We have been and remain interested in a solution that addresses the DOJ's issues with the T-Mobile merger."

While California Attorney General Kamala D. Harris opposed the merger, she left the door open to a compromise.

"I look forward to working with the parties involved to resolve this matter in a way that will create jobs in our state, encourage a vibrant technology sector, and protect competition in the marketplace," Harris said in a statement.

There has been a recent spike in political activity around the deal, representing a galvanization of each side. Yesterday, a collection of 15 House Democrats put pressure on the president to settle the lawsuit and approve the deal.

In July, 11 state attorneys general expressed their support of the deal.

While the opposition today is only made up of seven of the 50 states, they represent a third of the population.

"AT&T's propaganda and political posturing aren't working in the face of such overwhelming opposition and evidence against this deal," said Craig Aaron, president of consumer and media advocate group Free Press.

Related stories:
• DOJ's statement regarding AT&T and T-Mobile
• AT&T responds to Justice Department lawsuit
• AT&T/T-Mobile merger finds more support in the states
• States weigh in on AT&T-T-Mobile merger

States don't have the power to block the deal, but they can influence the federal regulators and make it more onerous if AT&T attempts to negotiate for concessions to close the deal. They can also slow down the process with their own lawsuits.

The deal elicited opposition from the likes of consumer groups and, most visibly, Sprint Nextel. The opponents argue that the merger would reduce the amount of competition in the industry and kill innovation with one fewer competitor in the market.

"Sprint commends this bipartisan group of state attorneys general for joining with the U.S. Justice Department to protect consumers, competition and American jobs," said Vonya McCann, Sprint's senior vice president for government affairs.

AT&T has argued that the deal with T-Mobile would ease its looming spectrum crunch and allow it to provide wireless broadband access to more people in the country. In a filing last week, the company argued that the Justice Department is painting an inaccurate picture of the deal and fails to understand its merits.

Updated at 2:16 p.m. PT: with statements from the attorney generals of California, New York and Massachusetts, as well as from Sprint.