News Analysis: The FCC has informed AT&T that it will evaluate the company's bid to acquire Qualcomm's 700 MHz spectrum holdings along with the acquisition of T-Mobile's licenses, effectively putting the brakes on the spectrum purchase.
AT&T was sadly mistaken if it was counting on the FCC to just quietly approve the deal to buy 700 MHz spectrum from Qualcomm
for $1.9 billion before it separately reviewed its proposal to buy all of T-Mobile for $39 billon.
Why did this prove a forlorn hope? Because AT&T's primary rationale
for buying T-Mobile is that it needs T-Mobile's spectrum. Considering
that AT&T already has more spectrum assets than any other wireless
company, and stands to gain more when it buys up Qualcomm's holdings,
you can see why AT&T would rather the FCC did not examine both
deals at the same time.
But the FCC did notice and told the company Aug. 8 that it was putting approval on hold until the deal with Qualcomm
could be considered along with the deal to buy T-Mobile. This means the
FCC is going to decide whether AT&T really needs so much
spectrum that it must buy a competitor to make it happen.
If everything that AT&T wants were to be approved, its spectrum
holdings would be vast. The company would control far more available
radio spectrum than any other company and would effectively marginalize
its competitors. Sprint would be constrained, and even Verizon Wireless
could find itself bumping into AT&T as it tries to grow. In effect,
AT&T would rise again to become the Ma Bell of the wireless
Of course, the FCC wasn't the only group to notice. Sprint, the wireless company
that's sure to be marginalized if the T-Mobile deal goes through, added
its own comments. "When AT&T announced its proposed $39 billion
takeover of T-Mobile in March, the Federal Communications Commission
was already reviewing AT&T's $1.9 billion offer for Qualcomm's 700
MHz spectrum, which AT&T had announced just three months earlier,"
said Vonya McCann, senior vice president for Government Affairs.
"Given the complexity of the regulatory review of both proposed
transactions, it's a reasonable step for the FCC to coordinate the two
reviews. The proposed transactions would produce game-changing effects
on consumers and on competition in the wireless market. Over the next
few months, we look forward to working with the FCC and other
interested parties as the FCC conducts a coordinated review of the two
transactions. Such a review makes abundant good sense and clearly is in
the public interest."