News Analysis: The FCC staff expresses grave doubts about AT&T's claims that its proposed merger with T-Mobile is in the public interest and that it won't harm customers or the U.S. economy.
Communications Commission Chairman Julius Genachowski has begun circulating a
draft order that would refer the proposed transfer of T-Mobile's licenses to
AT&T to an administrative law judge for trial on the grounds that the
transfer isn't in the public interest and should be denied.
to sources at the FCC who spoke on the condition of anonymity, the order, if approved by
the full commission, would delay any merger far beyond the end of any antitrust
actions by the U.S. Department of Justice.
FCC staff officials who briefed reporters Nov. 22 said that such a referral to an
administrative law judge happens when there are substantial questions of fact
or questions about the license transfer being in the public interest. One staff
comment released today is that if the merger violates antitrust rules, "it
can't possibly be in the public interest." Meanwhile, a senior FCC
official said, "The record clearly shows that-in no uncertain terms-this
merger would result in a massive loss of U.S. jobs and investment."
to FCC officials deeply familiar with the staff analysis of more than 200,000
pages of documents, 100 meetings with interested parties, 30 meetings with the
applicants and 50 petitions to deny, the staff has concluded that the proposed
merger would significantly diminish competition by an amount they said was "unprecedented."
staff reports said that they have never seen anything like this proposal, which
they said would result in the largest market concentration in history across 99
of 100 markets studied. The only market where it would not increase market
concentration is in Omaha, Neb., where T-Mobile does not operate at all.
to another FCC official, the decision to refer the matter to an administrative
law judge was based on internal materials the commission obtained from AT&T
and T-Mobile. From these documents, the staff concluded that some of the
claimed benefits of the merger were not supported by facts. The staff concluded
that the merger would lead to massive job loss and would have no significant
effect on any 4G rollout.
decision by the full commission is expected in the coming weeks. Once that
happens, the administrative law judge, who has not been selected yet, could
begin discovery and hear motions. But the actual trial of the facts would not
begin until after the
U.S. Department of Justice antitrust suit
against AT&T concludes. If DOJ
prevails and the merger is enjoined, then the FCC hearing would be dropped as
moot. However, if AT&T prevails or if there is a settlement, then the FCC
review of the transfer of T-Mobile's licenses would continue on a separate
trial before the administrative law judge would take months to complete,
effectively putting any merger on hold for a significant period of time. Even
if the antitrust suit comes out in AT&T's favor, the FCC could still
prevent it by denying any license transfer. Once the trial ends, the
administrative law judge presents the court's findings to the FCC.