FCC Joint Qualcomm, T-Mobile Review Could Put Brakes on ATandT Growth Plans

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 industry.

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."

Wayne Rash

Wayne Rash

Wayne Rash is a freelance writer and editor with a 35 year history covering technology. He’s a frequent speaker on business, technology issues and enterprise computing. He covers Washington and...