The chances for the $39 billion AT&T/T-Mobile merger succeeding have just gone from bad to much, much worse.
Although the Federal Communications Commission on Tuesday granted AT&T’s request to pull its merger application from review, giving AT&T time to retool the plan in private, the FCC also published a damning, lengthy report outlining why it wasn’t convinced the merger was in the public interest in the first place.
“…The Applicants [AT&T and T-Mobile] have failed to meet their burden of demonstrating that the competitive harms that would result from the proposed transaction are outweighed by the proposed benefits,” the report states.
Specifically, the report states that the FCC basically agrees with the Justice Department that the deal would harm consumers by reducing competition and resulting in increased prices and fewer service options in the mobile phone market.
The DOJ was conducting a separate review of the merger and filed an antitrust lawsuit against AT&T in September to block it. That case is still going forward, with arguments set to begin in a February 13, 2012 hearing.
FCC officials said in a Tuesday press conference that the report had actually been drafted ahead of a planned FCC hearing on the merger, which had fist been reported last week on November 22.
AT&T on November 24 subsequently moved to pull its application from the FCC’s review process to avoid the hearing, which would have involved testimony from witnesses against the merger.
Still, the FCC had to approve AT&T’s request or deny it and go ahead with the merger.
Advocacy groups against the merger, including Public Knowledge and the Media Access Project, had filed a letter with the FCC on Monday imploring the agency to block AT&T’s request, arguing the hearing should go ahead as planned.
While that won’t happen now, there was no mistaking the disappointment and anger from AT&T following the FCC’s decision on Tuesday to allow the withdrawal alongside the publication of the FCC’s report.
As AT&T’s Senior Executive VP of External and Legislative Affairs Jim Cicconi said in a statement:
“The FCC has recognized that it is required by its own rules to dismiss our merger application. This makes all the more troubling their decision to nonetheless release a preliminary staff report on the merger.”
Cicconi continued: “This report is not an order of the FCC and has never been voted on. It 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. It has no force or effect under law, which raises questions as to why the FCC would choose to release it. The draft report has also not been made available to AT&T prior to today, so we have had no opportunity to address or rebut its claims, which makes its release all the more improper.”
AT&T’s opponents, among them Public Knowledge and Sprint, which has filed it’s own, separate antitrust lawsuit against AT&T, were elated with the publication of the report, as they can now use it to prepare for their own arguments against the merger.
As Sprint’s Senior VP of Government Affairs Vonya McCann said in a statement emailed to TPM late Tuesday night: “FCC Chairman Genachowski and the staff of the Commission have listened to the American consumer. Consumers are best served when competition is allowed to thrive.”
McCann added: “At Sprint we share this view and applaud today’s actions by the FCC. The investigation’s findings are clear: approval of AT&T’s bid for T-Mobile would lead to higher prices for consumers, eliminate jobs, harm competition, and dampen innovation across the wireless industry.”
Public Knowledge co-founder Gigi B. Sohn sounded much the same note in a statement published late Tuesday,
“The information that the FCC compiled over much of this year should spell the end of AT&T’s attempted takeover of T-Mobile. The Commission was prepared to challenge on the basis of its investigation the justifications AT&T gave for the takeover, including those that the deal would somehow create tens of thousands of jobs.”
The question now remains, how, if at all, AT&T and T-Mobile can work out a plan to divest enough of either company’s assets (most likely T-Mobile’s) to make the deal acceptable to federal regulators. But given the way those regulators have treated the merger so far, it’s difficult to see any re-tooled plan getting a good reception.
Carl Franzen
Carl Franzen is TPM Idea Lab's tech reporter. He used to work for The Daily, AOL and The Atlantic Wire (though not simultaneously, thankfully). He's never met a button that didn't need to be pressed. He can be reached at carl@talkingpointsmemo.com.
good.....layoff thousands...then raise rates over time...........F88k AT&T
last thing that worked in this country was the phone company. its been all downhill since then.
The Bottom line is MONOPOLY is against the law and this deal should be stopped based on that alone
Charles Thaboogeyman Not quite true. Legally acquired monopolies through actual skill in the product market are fully legal and are a well-recognized part of the economy. What is unacceptable under antitrust law is the willful acquisition of maintenance of a monopoly, which is what this is.
But yes, this clearly passes the illegitimate monopoly test and needs to be stopped.
Does anyone remember that "The Phone Company" was broken up in the 1980s? Because they had a monopoly on long distance and the cost was exorbitant . Long distance is not an issue today, but monopoly still is. Bush's FCC would never have stopped this - there IS a difference between the parties.
Powkat The breakup of the old 'Ma Bell' AT&T was a settlement of a lawsuit by MCI over a long distance 'trunk' line between St Louis and Chicago. The suit had been going on since the mid 1950s when it was finally settled. If you want to read about it, find the book called 'Wrong Number' which came out in the late 80s.
'Ma Bell' used long distance revenues to subsidize local service. The company was a very good 'monopoly' expanding local phone service throughout the country. The terms of the breakup allowed the 'new' AT&T to go into wireless and data transfer. It didn't prevent the new AT&T from buying back the 'Baby Bells' as the new regional companies were called.
Now we have basically the same company but it's unregulated. Don't know where the lack of regulation makes it better or worse today.
Remember "Reach out and crush someone" ???
I am glad that this deal is falling apart. ATT has horrible service and coverage in rural areas. Let alone the antitrust issues.
VikingRN AT&T advertises they have 97% coverage but that is obviously the population, not the country. Turkey has cell service that covers 98% of the country, even the remote rural areas.
AT&T would probably be happy to get rid of all of T-Mobile's assets as long as they can be spread out into tiny, useless pieces. They just want the T-Mobile girl off the TV and less competition so they can raise prices. T-Mobile has nothing they want. It's all about eliminating a competitor. Oracle's been allowed to do that for years, buying up and destroying competing software companies.
Joe Buck "T-Mobile has nothing they want."
They have one thing AT&T wants... customers.
eric Madsen joe Buck It is all about Bandwidth, like lakefront property, it isn't made anymore.
Joe Buck Not true. T-Mobile has several things that AT&T very much wants. First and foremost, it wants its spectrum allocations. There is limited radio spectrum available that is appropriate for use with GSM and LTE, and the need to share that spectrum with T-Mobile puts a very real limit on the future expansion of AT&T's bandwidth. T-Mobile also has a solid infrastructure covering the southwest, particularly California where AT&T's coverage is spotty. By acquiring additional spectrum and towers throughout the country, AT&T could significantly increase their capacity and coverage while improving service.
I find this chart to be quite informative- http://www.wikinvest.com/images/thumb/0/00/Att_his...
Flying Squid wow.
Divesting enough assets to make the merger allowable would be kinda self-defeating, since that would also mean divesting enough assets that the resulting company wouldn't have the commanding position required to extract oligopoly rents from consumers. Which was the whole point of the merger.
rp10007 exactly. It is must easier to collude with one main competitor(Verizon) than with 2. Sprint is a distant 3rd to At&t and Verizon.
How, precisely, do the arguments proffered here not apply in spades to the TBTF banks?
Guess the days of Ed Whitacre running the FCC are over
Nice to see the Obama administration dusting off those anti-trust laws.
Amen. The old Reagan mega-mergers and takeovers should never have been allowed but you know the Repubs and their money grubbing policies and the public be damned philosophy. The story of lower prices after mergers has proven to be pure BS. Hope this merger never happens. AT & T was broken up for a reason.
HappyFeet Even Reagan knew AT&T was too big.
Flying SquidHappyFeet I am old enough to remember when they broke up Ma Bell who had a total monopoly. You youngin's wouldn't remember when there was " a phone company ". You had to use their lines their phones and were not allowed to modify their equipment. Ironicaly we seem headed back to those days .....the cable company ...2 choices the cellphone company - down to 5. Media conglomerates - the big 6. Just the way the Republicans like it
rumblejHappyFeet I'm just barely old enough to remember Ma Bell charging telephone rental fees.
rumblejFlying SquidHappyFeet I remember the olden times too. Young enough have never seen less than 7 digits in a local number, old enough to have learned to dial a phone…
Agreed that the consolidation of the industry is troubling: business seems to tend toward monopoly under the current rules, in every segment. The breakup was framed as being in favor of choice (only time you'll see a Republican hide behind the fig-leaf of "pro-choice.") but it doesn't seem to work out that way. Between consolidation at the national level and local monopolies, do we really have choice? And almost 30 years on, I have to wonder if the breakup was as good an idea as we were sold?
paul_beardrumblejFlying SquidHappyFeet Oh God, you make me feel old :P I learned how to use a dial phone, too. Although at least I'm young enough never to have been able to bypass payment on a payphone by tapping the hangar to mimic the dial clicks.
Not even the first time this week something made me feel old, either:
rumblejFlying SquidHappyFeet There were three large phone companies providing local service pre 1980: AT&T, General Telephone and Continental. There were and still are some small independent companies in individual cities, like The Roseville (Ca) Telephone Co. AT&T had a total monopoly on the long distance lines through their 'Long Lines' division. One also had to use equipment developed and manufactured by Bell Labs on the AT&T network. There are more choices today but I wonder if things are really better.
paul_beardrumblejFlying SquidHappyFeet I remember picking up the phone in the early 1950s in NJ and having the operator ask 'number please'. The dial system was put in circa 1955 with long distance access without dialing the '1' first. I also remember 'party' lines.
paul_beardrumblejFlying SquidHappyFeet Locally, we live around Bell South coverage, due to the break up of Ma Bell, we have TDS. So, we get to pay long distance charges in the same area code, we pay more for services, there are two other counties in the state that have TDS, the rest have Bell South. So, while Bell South has a package that anywhere in West. Tn, no matter the area code, it's a free local call. TDS, it's a long distance call, the ONLY LOCAL calls are just that local, I could call in the county I live in and that is it! I wish I had the "choice" to choose which phone company for my land line. I remember the days of Ma Bell, I do remember phones before touchtones, I remember dialing the phone. The service we had with Ma Bell was so much better than the service we have now. The lines were maintanced inside and out, and every decade or so the lines were changed. You didn't have to rent the phones, you did purchase them at your local phone company, sure they were expensive, but they were made here in the U.S, and where I lived in ILL. it was UNION, so I didn't mind, and I know my parents sure didn't. Those phones were durable, I don't know how many times I picked up the receiver and hit my brother with it. Never busted or cracked, can't say it about phones now. They were heavy and could take a lot of abuse. I like how the choice isn't ours to make, and the only difference I really found out even decades later, was the annoying phone calls trying to convince me that their long distance service is better than what I had. I did try different long distance services and always went back to AT&T, just better service and usually a better price in the long run.
rumblejFlying SquidHappyFeet For people who don't live in the major markets of NYC, Chicago, LA, etc... there is still only 1 telephone company...that never changed...the break up of AT&T in the 80s just set up a series of local phone company monopolies...now to avoid having to push high cost advanced services to nominally profitable markets, the big local monopolies are spinning off their least profitable regions to shell companies like Frontier (Verizon) & Century Link (Qwest) here in WA state...this is done only to prevent the federal regulators from forcing them to offer high end services to these areas. As long as the FCC allows these telecoms to thumb their noses at them and the consumers with these actions, they are just whitewashing their responsibilities to the consumer!
Finally the US government got something right. The AT&T/T-Mobile merger is bad for consumers and should be stopped.
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