ATandT, T-Mobile Deal to Get Reviewed by California

In a split 3-2 vote, the California Public Utilities Commission said it would scrutinize AT&T's proposed $39 billion purchase of T-Mobile USA.

Suggesting a more involved, hands-on approach to the wireless industry, the California Public Utilities Commission said it would look into AT&T's proposed acquisition of T-Mobile USA in order to investigate, gather and analyze information relevant to the proposed merger's effects on the California economy and California consumers. In a split 3-2 vote, the CPUC said it would take steps to scrutinize AT&T's proposed $39-billion purchase of T-Mobile.

The CPUC will analyze whether to apply any conditions that would mitigate any California-specific effects of the merger, and whether the CPUC will need to take any further action. In addition, the information the CPUC gathers will create a record that the CPUC can relay to the Federal Communications Commission in conjunction with the FCC's review of the proposed merger.

In launching the investigation, the CPUC noted that the two companies, through their California subsidiaries, once merged, would have a combined total of approximately 20 million California wireless telephone and data customers, and more than 47 percent of the California wireless market.

The proposed merger, if effected, would leave the affiliates of California's two largest local telephone companies, AT&T California and Verizon California with more than 77 percent of the California wireless telephone market, including both voice and data. That projected market share would be an increase from the companies' combined current market share of 65 percent.

"We recognize that the wireless market is dynamic and growing, having gained more than 100 million customers since 2002. Yet the potential for greater wireless market concentration, and specifically, a greater potential concentration in California than nationally, prompts us to gather facts and receive comments," said CPUC Commissioner Catherine Sandoval. "Our examination will address a number of issues, including what is the relevant market, will the proposed merger maintain or improve the quality of service, whether T-Mobile's lower-priced plans would continue to be available to customers, and whether the proposed merger, overall, is in the public interest."

In the course of the review, the CPUC will hold public workshops to obtain input on issues, ranging from competition in the underlying transport of telecommunications traffic to innovation in wireless handsets and offerings and customer-care issues. In addition, the CPUC will hold public-participation hearings, specifically to hear directly from members of the public; those hearings will be in July and will be held in several locations in T-Mobile's service area. "The CPUC has set an aggressive timeline for this proceeding, with a target decision date in early October," the commission said in a statement.

The political blog Politico reported AT&T is garnering support for the deal from a variety of liberal groups that are not specifically connected to the telecom industry, including the nonprofit agencies the National Association for the Advancement of Colored People, the Gay & Lesbian Alliance Against Defamation and the National Education Association. The declarations of support have raised eyebrows, as they have all received financial support from AT&T. An AT&T spokesman told the blog that AT&T was proud of its history of nonprofit support, while the agencies stressed the donations had nothing to do with their decision to support the deal.

It's not just nonprofits that are jumping on the acquisition bandwagon: Microsoft is one of a handful of tech giants publicly backing AT&T's bid to acquire T-Mobile, according to documents submitted to the Federal Communications Commission. In doing so, Microsoft joins Facebook, Oracle, Research In Motion, Yahoo and others. While the acquisition has support from many big players, it has at least one diehard opponent: Sprint, which could find itself squeezed between mega-behemoths Verizon and AT&T if the deal is allowed to go through.