News Analysis: The detailed report on the FCC staff study of the AT&T, T-Mobile wireless license transfer application finds substantial questions of fact and misstatements by AT&T regarding the effect the merger would have on competition in the wireless market.
Federal Communications Commission told the press today that it has accepted the
request of AT&T and Deutsche Telekom to withdraw their license
application for the transfer of T-Mobile's spectrum licenses to AT&T
means that while the license
transfer actions are no longer before the commission, they can be refiled.
In a highly unusual move, the FCC also released a 266-page staff report detailing the effects of the merger on competition,
the public interest and wireless broadband deployment. The staff report also
focused on what the commission had previously termed "substantial questions of
fact" regarding AT&T's claims in merger documents.
the public version of the staff report is highly redacted, it makes clear that
the commission's staff simply does not believe many of AT&T's claims. The
report calls into question the claims of jobs growth, pointing out that
AT&T internal documents described efficiencies that would be gained by
staff reductions. In addition, the AT&T claims of growth in secondary
employment were questioned because they lacked credible evidence. One speaker
at today's press call, who cannot be identified because the briefing was on
background, said AT&T relied on an old study that looked at the transition
from 2G to 4G technology, rather than the change from HSPA+ to LTE that
AT&T says it is planning.
of the briefing team also said AT&T's engineering and economic studies were
flawed in several ways, including overly optimistic predictions and assumptions
that were not tied to reality. "We enlisted an army of engineers, economists
and lawyers to review AT&T's proposal," one of the briefing panel members
explained. That person went on to explain that AT&T failed to meet the burden
of showing little competitive harm, "The benefits were insufficient to overcome
analysts also said an AT&T, T-Mobile merger would lead to substantial job
loss, despite AT&T's public claims to the contrary. The staff found that
the engineering and economic models were flawed and overly optimistic and that
AT&T's claims that it needed T-Mobile to build out its LTE 4G network were
and Deutsche Telekom announced on Thanksgiving Day that they would withdraw
their license transfer applications. Previously, the FCC announced that a draft
order was being circulated that would refer the license transfer to an
administrative law judge because of doubts about whether or not the license
transfer was in the public interest and because it questioned the veracity of
AT&T's assertions regarding the merger's effects.
Chairman Julius Genachowski said after the press briefing that his agency only
did its job in reviewing the application and reaching the conclusions stated in
the staff report.
is the engine of our free market economy and a cornerstone of the FCC's
mandate. Our review of this merger has had a clear focus: fostering a
competitive market that drives innovation, promotes investment, encourages job
creation and protects consumers. These goals will remain the focus if any
future merger application is filed," Genachowski said.
stories began circulating during the morning of Nov. 29 that AT&T was in
talks with Leap Wireless, the company that sells Cricket phones, to sell
T-Mobile assets, including towers, customers and some spectrum, to Leap
Wireless if the merger goes through.
Wayne Rash is a Senior Analyst for eWEEK Labs and runs the magazine's Washington Bureau. Prior to joining eWEEK as a Senior Writer on wireless technology, he was a Senior Contributing Editor and previously a Senior Analyst in the InfoWorld Test Center. He was also a reviewer for Federal Computer Week and Information Security Magazine. Previously, he ran the reviews and events departments at CMP's InternetWeek.
He is a retired naval officer, a former principal at American Management Systems and a long-time columnist for Byte Magazine. He is a regular contributor to Plane & Pilot Magazine and The Washington Post.