ATandT, T-Mobile Deal Takes a Step Forward, as FCC Opens Docket

The FCC has begun the long process of evaluating whether AT&T's intended purchase of T-Mobile would serve "the public interest, convenience and necessity."

Federal regulators are kicking off what is expected to be a yearlong review of AT&T's $39 billion bid to buy T-Mobile, a deal that would create by far the largest wireless carrier in the United States.

The Federal Communications Commission on April 14 released a Public Notice announcing the opening of a docket on the matter, and in a conference call with the media, outlined how it intends to handle the high-profile matter. As part of the telephone briefing, reporters agreed not to quote any of the speakers by name.

Ultimately, the question the commission needs to answer, in all of these proceedings, is, "Would granting the requested approval to transfer control of T-Mobile's Commission-issued licenses serve the public interest, convenience and necessity?" said one commissioner. "The applicants, AT&T/T-Mobile, will have the burden of proof-the obligation to persuade us that the public interest test is satisfied."

The commissioners said they expect AT&T and T-Mobile later this month to file applications asking for the FCC to OK the transfer of control of T-Mobile to AT&T. The commission will review the file, make sure everything is in order and then put out a statement a week later.

As a procedural matter, the commissioners said the case will be governed by "permit-but-disclose ex parte procedures." Essentially, should one side make a presentation after the applications are filed, they must summarize the presentation and file it electronically, so that the FCC can release a public notice saying that it's publicly available.

In a pleasingly your-book-report-cannot-have-five-inch-margins way, the FCC even went into a bit of detail about what constitutes the summarizing of a meeting, saying that one- or two-sentence descriptions, or just listing the subjects discussed, won't cut it.

Eventually, the FCC will decide whether the deal will get its go-ahead first by determining whether it would comply with specific requirements in the Communications Act and any other applicable statutes. Assuming the answer is yes, the commissioners will move on to the broader public interest evaluation. The commission precedent, regarding the public interest inquiry, is that it encompasses the broad aims of the Communications Act, a commissioner said.

"It includes, but isn't limited to, a competition analysis. We ask whether the transaction would enhance or preserve competition that exists today, or would it limit that competition. That is, to some extent, an inquiry that overlaps with the antitrust authorities," he said. "But it also goes beyond that antitrust inquiry, and we can and do consider more broadly the effect of the transaction on future competition and we take a broader view than the antitrust agencies in looking at competition issues."

At the end of the day, he concluded, the commission's job under the public interest test is to "balance any potential harms that we identify in the transaction against the potential benefits ... and to find whether the applicants have carried their burden of establishing that it would be consistent with the public interest to transfer control of the licenses."

Potential benefits for whom weren't exactly clear. Should the deal be approved, it's estimated that AT&T and Verizon would have a "duopoly," controlling approximately 70 percent of the wireless market. Sprint is currently the nation's third-largest carrier and would keep that distinction should the deal go through-though it would be majorly dwarfed by the top two players.

In a March 28 statement, Sprint announced that it plans to fight the acquisition, which it believes "would reverse nearly three decades of actions by the U.S. government and the courts that modernized and opened U.S. communications markets to competition."

During a question-and-answer portion of the FCC conference call, little more was cleared up, with moments of silence often greeting questions and requests for details about how exactly competitiveness and competition in the industry would be measured.

At one point, a commissioner likened the review process to how some people describe their relationships on Facebook: "It's complicated."