Monday, November 21, 2011

FCC Chairman Opposes AT&T + T-Mobile Deal

FCC Chairman Julius Genachowski signalled his opposition to AT&T's proposed acquisition of T-Mobile USA by informing fellow commissioners that he will seek to block the $39 billion deal. As of Tuesday night, a public statement on the issue had not yet been issued but media reports indicated that Genachowski will refer the issue to an administrative law judge rather than negotiate possible remedies with AT&T to overcome any points of contention.

A decision by the FCC not to approve the transfer of T-Mobile's licenses to AT&T would present a major obstacle to the proposed merger.

Larry Solomon, senior vice president of Corporate Communications, AT&T, issued the following statement:

"The FCC's action today is disappointing. It is yet another example of a government agency acting to prevent billions in new investment and the creation of many thousands of new jobs at a time when the US economy desperately needs both. At this time, we are reviewing all options."

The Communications Workers of America (CWA) issued their own statement:

"The action by the Federal Communications Commission on the AT&T/T-Mobile merger is a job killer at a time of 9 percent unemployment. Our T-Mobile members know that the path to secure jobs is through massive investment in a 4-G LTE network across America. T-Mobile management has clearly stated that the company doesn't have the scale to justify that investment. AT&T has promised to retain 23,000 call center, retail and technical workers who now have no clear employment path. Additionally, AT&T has committed to return 5,000 jobs to the U.S. from Asia and invest $8 billion in new capital and broadband buildout. The FCC's decision relegates the issue of good jobs to the bottom of the government's priorities."http://www.fcc.govhttp://www.att.comThe U.S. District Court, District of Columbia has set a date of February 13, 2012 to hear lawsuit brought by the U.S. Department of Justice to block AT&T's proposed acquisition of T-Mobile USA. The Department of Justice lawsuit, which was filed August 31, seeks to block AT&T’s acquisition of T-Mobile on the grounds that the deal would result in "tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for their mobile wireless services." In its conclusion, the DOJ said it was not convinced by AT&T's arguments that the proposed transaction would yield efficiencies benefiting consumers and outweighing adverse impacts on competition. The key finding was that AT&T could achieve the same network power and reach by deploying its own infrastructure rather than by eliminating a competitor.

  • AT&T and T-Mobile USA filed a 27-page response in U.S. District Court to the Department of Justice's lawsuit that seeks to block their proposed merger. In it, the carriers argue that the DOJ failed to appreciate how the efficiencies of the acquisition would lead to a healthier market for advanced wireless services, that the DOJ failed to understand the competitive dynamics currently at play in this industry, and that the DOJ failed to appreciate how the spectrum shortage they now face will lead to higher prices should their merger not go forward.

    AT&T noted that T-Mobile USA has been losing customers, lacks the spectrum to deploy a true 4G network, and its parent company is unwilling to invest the funding needed to make it a viable competitor in the long term. In conclusion, the carriers state the "efficiencies more than outweigh any anticompetitive effect from this merger."
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