Rivals' Cheers Could Turn to Tears

AT&T's rivals may be cheering the Justice Department's move to block the takeover of T-Mobile USA, but some of them could get hurt if the deal falls through.

While other carriers may benefit from a distracted AT&T and T-Mobile in the short term, they could suffer if—as the Justice Department argues—killing the deal leaves an aggressive, low-priced competitor in the market. They'll also lose the opportunity to pick up assets like customers or spectrum that AT&T would have to shed to complete a deal, and they may find it difficult to make big acquisitions of their own. Bernstein analyst Craig Moffett said the news, clearly negative for AT&T and T-Mobile, is also likely bad for all U.S. carriers. "Put simply, the industry will be structurally less attractive than it would otherwise have been," he said. "Pricing is likely to be less stable, and profound technological risks, including free texting and bandwidth arbitrage, that would be manageable in the context of a significantly consolidated industry now become much more threatening."