Yesterday AT&T issued the following statement regarding the status of its merger with T-Mobile USA:

“AT&T and Deutsche Telekom advised Judge Huvelle this morning that they wish to stay any further Court proceedings until January 18, 2012, to allow the two companies time to evaluate all options. The U.S. Department of Justice joined in the filing.

“AT&T is committed to working with Deutsche Telekom to find a solution that is in the best interests of our respective customers, shareholders and employees. We are actively considering whether and how to revise our current transaction to achieve the necessary regulatory approvals so that we can deliver the capacity enhancements and improved customer service that can only be derived from combining our two companies’ wireless assets.”

Doesn’t sound like these two companies are giving up, but may be re-configuring how they go about putting the synergies of a merger into a package that the U.S. Department of Justice and the court can accept.

Bloomberg News reported last Friday that MetroPCS may be interested in purchasing subscribers and spectrum from AT&T and T-Mobile. Analysts are estimating that such a transaction may cost MetroPCS between $2 billion and $4 billion, according to Bloomberg.

To satisfy the U.S. Department of Justice, nothing short of an exact replica of T-Mobile would probably suffice since the Justice Department is concerned about the impact a total absorption of T-Mobile would have on competition in the wireless market.

On the other hand, such an arrangement may get the Justice Department, AT&T, and T-Mobile closer to a settlement.

Given that MetroPCS is a small, regional player, there should be no antitrust hurdles for the company to leap, but it, along with AT&T and T-Mobile, would have to petition the Federal Communications Commission for permission to make any necessary license transfers.

The Wall Street Journal today reported that a number of states have joined the U.S. Department of Justice’s lawsuit blocking the purchase of T-Mobile USA by AT&T.

Interesting. Sounds like all the states are showing is that the relevant geographical market for this transaction is the local market. If the relevant market is nationwide, the states should save their money and allow the regulator of interstate commerce, the federal government, litigate this one.

At first blush, I don’t think that allegedly cash-strapped states are in this to ensure competition. They are in this to get their cut of any promises AT&T has to offer in order to get the deal done.

Holman Jenkins wrote a piece in The Wall Street Journal recommending that President Obama’s administration follow the policy path taken by President Richard Nixon over forty years ago. That path called for a more passive approach to antitrust regulation.

Mr. Jenkins sees the U.S. Department of Justice’s lawsuit to block AT&T’s purchase of T-Mobile as not doing much for the economy much less the market for wireless services.

What’s also disappointing, in addition to failing to appreciate the notion of market disruption, is Justice’s failure to properly identify the relevant product market. They think it is mobile wireless telecommunications. It isn’t. The relevant product market is broadband access. Customers are buying these phones to primarily text, tweet, and update Facebook statuses.

Voice is secondary. And when consumers make a market for these broadband access devices and services, they make them at their local MetroPCS, Verizon, AT&T, Sprint, Boost, and Virgin Mobile stores …

Strange things come to mind when you are cleaning up your living room. When was the last time your saw someone pull out their cell phone for the sole purpose of making a phone call? It seems like we worry more about people texting while driving than we do talking while driving. According to the Pew Research Center, more adults are using their phones for leveraging social media and social networks, not to call in orders for pizza.

That is why the U.S. Department of Justice’s petition to block the acquisition of T-Mobile USA by AT&T, Inc., is disappointing in its description of the relevant product market. Consumers are not buying cell phones for the purpose of talking; they are not primarily telecommunicating.

Consumers are engaging in digital networking. Consumers are linking in; tweeting about; face booking. They are four squaring and flash mobbing. They are producing quickie videos of celebrities doing the quickie, and transmitting these videos to almost every point on the planet. Heck. Even Happy Feet the Lost Penguin made it to YouTube.

No, Justice Department. The relevant product market is broadband access to and distribution of media. When you take that 21^st century view of consumer behavior and engagement with the smartphone, the market becomes wider, and even AT&T becomes a much smaller player.