At the request of AT&T, the FCC agreed on Tuesday to dismiss without prejudice the company’s pending application to acquire control of T-Mobile USA, as FCC officials took the unprecedented step of releasing a 157-page staff analysis on the competitive concerns that induced FCC Chairman Julius Genachowski last week to seek an administrative law judge (ALJ) hearing on the $39 billion deal. Responding to news that Genachowski was circulating a draft order recommending an ALJ hearing at the conclusion of the ongoing Justice Department (DOJ) lawsuit against the AT&T/T-Mobile merger, AT&T and T-Mobile asked the FCC on Thanksgiving Day to approve withdrawal of the companies’ merger application. In submitting their request, AT&T and T-Mobile stressed that they were not cancelling their merger plans but had decided to postpone seeking FCC approval until after U.S. District Court Judge Ellen Huvelle issues her ruling in the DOJ antitrust case. While confirming its intention to re-file the T-Mobile merger application “as soon as practical,” AT&T said it would also take a charge of $4 billion during the final quarter of this year to account for the breakup fee due to T-Mobile if the deal falls through. As it approved the companies’ request for voluntary dismissal on Tuesday, the FCC also published a heavily-redacted internal staff analysis concluding that the merger would “substantially lessen competition.” Offering a summary of the staff findings to reporters, FCC officials noted that out of the 100 top markets, only one—Omaha, Nebraska—would be left with significant wireless competition upon completion of the AT&T/T-Mobile deal. FCC officials also explained that the merger would trigger the agency’s spectrum screen in 71 of the top 100 cellular markets—a level which represents 66% of the U.S. population. Citing the “disruptive” market influence of T-Mobile as a key provider of low-cost wireless services, the staff report determines that the deal is likely to raise prices for both residential and business consumers. The report also rejects AT&T’s claim that it requires the spectrum and network facilities of T-Mobile USA to deploy fourth-generation long-term evolution wireless broadband services to 97% of the U.S. population and also concludes that the deal will result in thousands of job losses. While welcoming the companies’ decision to withdraw their application, FCC Commissioner Michael Copps voiced hope that “we will no longer be expending significant FCC resources to examine this paradigm-shifting and complex transaction.” Characterizing as “troubling” the FCC’s decision to release a staff report on the merger that “has never been voted on,” AT&T senior vice president Jim Cicconi criticized the report as one that “has no force or effect under law, which raises questions as to why the FCC would chose to release it.”
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AT&T, T-Mobile withdraw merger FCC application, as FCC issues staff report on deal
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