The deal, which is still under review at the Federal Communications Commission, would catapult AT&T past Verizon Wireless to become the nation’s largest wireless carrier, leaving Sprint Nextel as a distant third-place player and certain to struggle.

Morgan Reed, executive director of the trade group, Association for Competitive Technology, said AT&T has at least one key fact on its side: Deutsche Telekom has said it does not plan to continue to invest in upgrading the T-Mobile network to deliver faster wireless. That means “T-Mobile is not a competitor anymore,” Reed said.

“T-Mobile has already stepped away from the table,” Reed noted. “We’re at three nationwide wireless carriers no matter what.”

The association, which represents more than 3,000 small and independent application developers, believes the merger would benefit the wireless broadband industry.

In addition, the Justice Department lawsuit portrays T-Mobile as having been a strong competitor in the past, but merger analysis is forward looking, said Washington attorney Robert Bell, who has represented clients in mergers for over 25 years.

“To the extent AT&T can show there’s good reason to believe that T-Mobile is going to be a very different kind of competitor in the future—for example, weaker financially, less innovative—then the lawsuit becomes quite a bit different,” Bell said.

AT&T and T-Mobile compete nationwide in 97 of the largest 100 cellular marketing areas, according to the suit filed in U.S. District Court in Washington, D.C. They also vie for business and government customers.

The lawsuit says the acquisition would eliminate a company that has boosted competition with low pricing and innovation.

T-Mobile has the first handset using the Android operating system, Blackberry wireless eMail, the Sidekick smart phone, national Wi-Fi “hotspot” access, and a variety of unlimited service plans.

In a statement, Sprint said the Justice Department’s lawsuit “delivered a decisive victory for consumers, competition, and our country. By filing suit to block AT&T’s proposed takeover of T-Mobile, the DOJ has put consumers’ interests first.”

Federal Communications Commission chairman Julius Genachowski said the record before his agency “raises serious concerns about the impact of the proposed transaction on competition.”

Although the FCC’s separate review of the proposed merger is still ongoing, the agency has never approved a significant merger that is being challenged by the Justice Department.


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