The U.S. Department of Justice has filed a federal antitrust lawsuit to block AT&T’s acquisition of T-Mobile USA, saying the deal was bad for consumers and unnecessary for AT&T to build out its network.

“AT&T’s elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market,” the Justice Department said in its suit.

AT&T bid to buy T-Mobile USA from Deutsche Telekom for $39 billion in March. If approved, the deal would create the largest wireless company in the United States out of what had been the nation’s second- and fourth-largest providers. Combined, AT&T–T-Mobile would be about one-third larger than Verizon Wireless, the current top carrier, and more than twice as large as Sprint at No. 2.

“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,” said deputy attorney general James M. Cole. “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. This lawsuit seeks to ensure that everyone can continue to receive the benefits of that competition.”

In an e-mail, FCC Chairman Julius Genachowski added his commission’s concerns to those raised by the Justice Department suit: “Competition is an essential component of the FCC’s statutory public interest analysis, and although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition.”

AT&T is vowing to fight the suit in court, and given how hard it’s lobbied for the deal on Capitol Hill and the money at stake, it’s likely to turn into an epic battle, fought as much by sympathetic lawmakers as by AT&T’s lawyers.

“We are surprised and disappointed by today’s action,” AT&T general counsel Wayne Watts said in a statement, ”particularly since we have met repeatedly with the Department of Justice and there was no indication from the DOJ that this action was being contemplated.

“We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed,” the statement said. “The DOJ has the burden of proving alleged anti-competitive affects and we intend to vigorously contest this matter in court.”

If the deal is blocked or falls through, AT&T would have to pay Deutsche Telekom $3 billion in cash. As part of its purchase agreement, AT&T would also be on the hook for shared wireless spectrum with T-Mobile USA in some regions and reduced charges for calls into AT&T’s network. Deutsche Telekom valued the total worth of the kill package at as much as $7 billion.

In public testimony before the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights in May, AT&T CEO Randall Stephenson said that his company needs to buy T-Mobile to avoid a wireless “spectrum crunch.” Both AT&T’s and T-Mobile’s chief executives claimed that on their own, they didn’t have enough access to wireless spectrum to meet their customers’ skyrocketing wireless voice and data needs. (AT&T reiterated that argument in its statement today.)

Sprint CEO Dan Hesse forcefully opposed the merger in front of the same Senate committee. “Just say no to this takeover,” said Hesse.

According to Hesse, if the deal were approved, both consumers and the U.S. economy risk “irreparable harm,” creating a “a 1980s-style duopoly” in which two similarly structured giants control 80 percent of the wireless market.

“The DOJ today delivered a decisive victory for consumers, competition and our country,” Sprint’s Vonya B. McCann said in a statement. ”By filing suit to block AT&T’s proposed takeover of T-Mobile, the DOJ has put consumers’ interests first. Sprint applauds the DOJ for conducting a careful and thorough review and for reaching a just decision — one which will ensure that consumers continue to reap the benefits of a competitive U.S. wireless industry.”

In June, several major tech companies and venture capital firms publicly supported the merger of AT&T and T-Mobile. These include Microsoft, Yahoo, Oracle, Facebook and Research In Motion, as well as VC firms Kleiner Perkins Caufield & Byers and Sequoia Partners.

In a joint letter to the FCC, several of these companies argued for the merger, based on the need for better wireless data infrastructure. “AT&T has indicated that it will migrate the T-Mobile network to LTE technology and offer LTE-based wireless broadband to 97.3 percent of the U.S. population,” the letter reads. ”AT&T has stated that its LTE deployment will bring significant benefits to residents of rural areas and smaller communities, where the benefits of real-time video and similar capabilities are most urgently needed to fill gaps in physical infrastructure for healthcare, education and other social needs.”

Not coincidentally, investment in wireless infrastructure and fewer networks to deal with also helps each of these companies deliver their products over those networks. (Google, notably, has remained mute on the merger.)

Just this week, AT&T argued that the merger would add U.S. jobs, promising to bring 5,000 wireless call-center jobs currently outsourced to other countries back to the United States if the deal were approved.

By way of comparison, AT&T laid off nearly 6,000 people this spring. From 2006 to 2010, the company cut more than 37,000 jobs, a number greater than the population of Menlo Park, California.

I’m no antitrust lawyer, but I don’t think an extra 5,000 call-center jobs is going to get this done.