AT&T Chafes at FCC Release of Staff Report Faulting Economics of T-Mobile Merger Plan

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The Federal Communications Commission's decision to release a staff report detailing objections to AT&T Inc.’s proposed plan to buy wireless carrier T-Mobile is “troubling,” particularly in light of the fact that the merger application has been withdrawn and dismissed, AT&T said Nov. 29.

“The FCC has recognized that it is required by its own rules to dismiss our merger application,” Jim Cicconi, AT&T senior executive vice president of external and legislative affairs, said in a statement. The release of the “preliminary” report has “no force or effect under law,” he said, “which raises questions as to why the FCC would choose to release it.”

The 100-plus page report found that the proposed combination—which the companies are still pursuing—would result in higher prices and reduced competition. It also found fault with the models the companies used to show the potential benefits of the combination.

The report is “simply a staff draft that raises questions of fact that were to be addressed in an administrative hearing, a hearing which will not now take place,” Cicconi said. It was also released before the company had a chance to review it and “rebut its claims,” he said.

“AT&T attempted to forestall release of the staff's detailed findings of fact by pulling its application. The public is entitled to know how its money was spent, and to know what the FCC staff concluded.”

Andrew Jay Schwartzman Media Access Project  

The report's conclusion states that “significant harms to competition are likely to result” from the merger, “primarily in the form of increased prices for consumers, reduced incentives for innovation, and decreased consumer choice.”

Among the report's findings:

• The merger would raise prices in major markets in 2012, 2013, 2014, and 2015, increasing New York-area rates as much as 8.3 percent next year.

• Many of the cost savings the companies said the merger would produce, such as those resulting from the firing of T-Mobile customer service representatives and facility maintenance personnel, “might be the result of lowering the quality of services to consumers.”

• The companies failed to show that the combination would result in a wider expansion of broadband access than would otherwise occur.

Taxpayers Funded Review, Opponent Says.

The Media Access Project, a public interest law firm that opposes the merger, praised the FCC for releasing the report. “The American public paid for scores of FCC employees to work, often around the clock, for nine months investigating the proposed AT&T-T-Mobile deal,” Andrew Jay Schwartzman, the firm's senior vice president and policy director, said in a Nov. 29 statement. “AT&T attempted to forestall release of the staff's detailed findings of fact by pulling its application. The public is entitled to know how its money was spent, and to know what the FCC staff concluded.”

AT&T and T-Mobile's owner, Deutsche Telekom withdrew without prejudice their pending application to the FCC after the commission said it would seek a rare administrative hearing to further examine the $39 billion buyout proposal. The commission approved the request Nov. 29. The proposed combination still faces antitrust suits by the Department of Justice and several state attorneys general, as well as regulators in California and industry opponents.

AT&T officials could not be reached for comment Nov. 30.

By Nora Macaluso  


The FCC staff report is available at http://transition.fcc.gov/transaction/ATT-TMO-redacted-PDF-final.pdf .