The U.S. Department of Justice is saying no to AT&T's (NYSE: T) proposed purchase of competing cell-phone carrier T-Mobile USA.

The agency has filed a lawsuit to stop the $39 billion acquisition, stating that the deal would reduce competition, boost prices and impede innovation, reports IDG News Service's Grant Gross.

"The combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services," Deputy Attorney General James Cole said in a statement. "Consumers across the country, including those in rural areas and those with lower incomes, benefit from competition among the nation's wireless carriers, particularly the four remaining national carriers."

AT&T responded by saying it was "surprised and disappointed" by the Justice Department's decision. Earlier in the day, the company dangled the prospect of returning 5,000 offshore call center jobs to the United States if the acquisition were to be approved.

The Justice Department noted in the lawsuit that T-Mobile, which is owned by Deutsche Telekom, was the first carrier to offer a smartphone running Android and the first to offer a national W-Fi hotspot. It also quoted T-Mobile documents referring to itself as "the No. 1 value challenger of the established big guys in the market."

AT&T has maintained that the acquisition would enable it to bring more advanced broadband service to more places, provide faster data speeds and decrease the number of dropped calls.

For more:
- see Grant Gross's article at Computerworld

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