Summary:

Evidence of a competitive wireless market in the U.S. continued to elude AT&T (NYSE: T) with the release of the latest numbers from MetroPCS…

MetroPCS

Evidence of a competitive wireless market in the U.S. continued to elude AT&T (NYSE: T) with the release of the latest numbers from MetroPCS. The upstart wireless carrier gained fewer subscribers than expected and posted a weaker profit than analysts had forecast during the second quarter, sending its stock down 30 percent Tuesday amid concerns about the future.

AT&T is hoping that federal regulators will buy its argument that the U.S. wireless market is strong and vibrant, completely able to support the merger of the second-largest company and T-Mobile, the fourth-largest company in the market. But U.S. Cellular, Sprint (NYSE: S), and now MetroPCS are having trouble hanging onto customers as top-tier smartphones available exclusively to companies like AT&T and Verizon become competitive advantages that can’t be matched.

MetroPCS reported earnings well below analyst forecasts and warned that its “churn” rate, or the number of customers that leave it for other carriers, looks like it will increase in the current quarter. According to Reuters executives blamed the performance on a weak economy, but investors punished the company’s stock and started to worry about Leap Wireless as well, which saw the price of its shares fall nearly 20 percent ahead of its own earnings announcement scheduled for Wednesday.

AT&T and Verizon are having little trouble coping with the same economic conditions, posting strong increases in revenue, profit, and subscribers over the last several weeks. Their performances combined with the weakness in the rest of the sector could make it very difficult for AT&T’s arguments about a competitive market to hold water with federal regulators.

Deutsche Telekom (NYSE: DT), which owns T-Mobile USA, is scheduled to report its own earnings results Thursday.

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