New York will 'closely scrutinise' AT&T's plan to buy T-Mobile

US TELECOM and mobile operator AT&T faces a "thorough review" of its plans to acquire T-Mobile USA by New York's Attorney General.

New York Attorney General Eric Schneiderman announced that his office will undertake the review of AT&T's planned acquisition of T-Mobile USA from Deutsche Telekom. In a statement the Attorney General's office said it will analyse the merger "for potential anti-competitive impacts on consumers and businesses across New York State".

Schneiderman certainly said the right words when justifying his course of action, saying that the acquisition would lead to a "process of consolidation that would lead to two firms - AT&T and Verizon - controlling nearly 80 per cent of wireless subscribers nationwide". He mentioned that the acquisition would create a "near duopoly" between the two firms, a statement that will conjure up memories of the bad old days of Ma Bell.

T-Mobile is popular in the state of New York and is seen by many as an affordable mobile operator. Schneiderman alluded to this point and added that the potential impact of AT&T buying T-Mobile would be even fewer mobile operators in cities such as New York's state capital, Albany.

AT&T is likely to face significant opposition to its plan to merge with T-Mobile. It announced the £24 billion ($39 billion) deal last week, saying it would extend mobile coverage and improve service. The US Department of Justice and Federal Communications Commission still have to approve the deal, however with New York's Attorney General saying his office will "closely scrutinise" the merger on behalf of New Yorkers, there is a chance that other states will follow suit.

AT&T has set aside $3 billion for a payoff to T-Mobile if the deal falls through. Given the reaction its plans have generated, AT&T might well have to wave goodbye to that money. µ