AT&T expressed its dismay Tuesday over the release of a new Federal Communications Commission report concluding that the carrier's proposed merger with T-Mobile raises significant competitive concerns due to the increased likelihood of unilateral and coordinated effects.
Though AT&T withdrew its merger application before the FCC last week, the commission nevertheless released its preliminary report on Tuesday. The U.S. wireless operator called the action "troubling."
According to AT&T Senior Vice President Jim Cicconi, the report merely raises questions of fact that would have been addressed in an administrative hearing if AT&T hadn't already withdrawn its application.
"It has no force or effect under law, which raises questions as to why the FCC would choose to release it," Cicconi said Tuesday.
Cicconi also complained that the FCC had not provided AT&T with a copy prior to its release. "We have had no opportunity to address or rebut its claims, which makes its release all the more improper," Cicconi said.
According to FCC member Mignon Clyburn, however, this week's release of a preliminary report on AT&T's proposed merger with T-Mobile was entirely proper. Among other things, he said, it "promotes federal agency transparency."
Pricing Consumers Right Out of Broadband
According to Clyburn, the U.S. wireless industry in general deserves to know what the FCC's staff had concluded. "Several outside parties have spent considerable time and resources to respond," Clyburn noted, "and they deserve to see the staff's analysis of the record."
In light of AT&T's continuing efforts to acquire T-Mobile's assets through negotiations with U.S. antitrust authorities, Clyburn said both wireless carriers would benefit from knowing what the FCC staff had learned after seven months of research. From AT&T's point of view, however, the FCC report has made its path to a successful merger even more daunting due to the scope and number of the potential objections it raises.
For example, the report expressed concern about the competitive effects that T-mobile's merger with AT&T would have on wireless markets ranging from roaming, wholesale and resale services, to backhaul access and handset availability.
What's more, T-Mobile's current business model specifically targets budget-conscious consumers, and there would have been no guarantee that the proposed merger would have continued to serve the needs of lower-income Americans.
"Many consumers may find themselves priced right out of broadband," said FCC member Michael Copps. "That is not a direction the country can afford to go."
Unlikely To Benefit Consumers
Among other things, the FCC's preliminary report was unable to conclude that the proposed merger would have created any new jobs for Americans. "Despite repeated claims that this transaction will be a significant job creator, the staff, after thorough review, could make no such finding," Copps said.
The FCC's staff members also were skeptical about the proposed merger generating any of the cost synergies that AT&T had been touting. And even if the carrier's oversimplistic assumptions were realized, they would not likely benefit consumers, the FCC report concluded.
By contrast, if the deal had gone through as originally structured, Americans would no longer have had access to T-Mobile -- an independent network that currently offers U.S. consumers lower prices than its other nationwide wireless rivals, the report said.
"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," FCC Chairman Julius Genachowski said Tuesday. "These goals will remain the focus if any future merger application is filed."