FCC Releases Report Blasting AT&T Claims About T-Mobile Deal Benefits

Just as the FCC promised to do earlier in the day when they revealed their decision to allow AT&T and T-Mobile to withdraw their FCC application, they have released their official findings and review of the deal. To say it isn’t positive for AT&T overall would be putting it mildly. For example, a key point from AT&T was about job creation…the FCC review discovers that in 2002 AT&T had 70,000 employees, after three mergers their staff size is now 67,000.

Let’s look at some more choice quotes from the 109 page document.

“The concentration levels and increases arising from AT&T’s acquisition of T-Mobile are a strong indicator of harm to competition — and in antitrust analysis trigger a presumption of such harm — for good reason…In addition, our record contains evidence concerning particular potential harms arising from the potential loss of competition in the provision of roaming, wholesale and resale, and backhaul services, as well as the development and sale of new handsets and devices.”

Oh but wait, there’s more:

In the report, the staff finds that the transaction, which would result in the top two wireless providers having a market share of approximately 75 percent, would substantially lessen competition and its accompanying innovation, investment, and consumer price and service benefits, thus undermining key goals of the Communications Act. Indeed, the staff notes that the unprecedented increase in market concentration that would result from this merger triggers the Commission’s screening tests for possible anti-competitive effects in a large number of local wireless markets.

It’s just getting started:

“The competitive concerns arising from the increased levels of concentration that this transaction would cause are exacerbated by the role that T-Mobile plays in wireless industry competition. T-Mobile has a history of disruptive competitive conduct that has continued at least up to the time the transaction with AT&T was negotiated. This transaction would result in the elimination of this competitive force from the wireless marketplace.”

Experts have discussed the possibility that AT&T can try and present a new proposal to the FCC and the Department of Justice. However, FCC Chairman Julius Genachowski indicated on Tuesday that he would new attempts at a merger to be met with similar concerns as express in the FCC’s first review.

“Our review of this merger has had a clear focus: fostering a competitive market that drives innovation, promotes investment, encourages job creation, and protects consumers,” Genachowski said in a statement. “These goals will remain the focus if any future merger application is filed.”

The FCC clearly indicates in this report that a duopoly is the likely result of any potential AT&T, T-Mobile deal or is at least a very real possibility. The FCC shot down AT&T’s claims of job creation and their desire to acquire much-needed spectrum. The FCC believes that AT&T will build up their LTE network to the 97% level regardless of a T-Mobile deal because it will be necessary to compete with Verizon on a national scale.

The report is an interesting read with plenty of choice quotes and information regarding the FCC findings. There is plenty of nighttime reading to be had from this 109 page report. You can start at the FCC link below.


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