FCC chief economist airs concerns over AT&T/T-Mobile merger

Written by  //  April 14, 2011  //  Telecommunications/Technology  //  No comments

The proposed transaction has yet to be submitted to the Federal Communications Commission for consideration, and the agency’s chief economist, Jonathan Baker, is already raising concerns about the deal’s potential increase on wireless prices.

Baker, who spoke late last month at a Washington antitrust lawyers’ conference, said in its analysis, the FCC must determine if the deal whereby AT&T would buy T-Mobile USA for $39 billion would reduce consumers’ communications alternatives, Bloomberg reported.

If consummated, the deal announced March 20 would couple the mainland’s second-largest and the fourth-largest wireless operators, reducing to three the number of national providers along with Verizon and Sprint Nextel.

In Puerto Rico, a market still reeling from the disappearance of Centennial as a result of a prior acquisition by AT&T, four companies would remain if T-Mobile were bought out.

In his speech, Baker said the FCC should pay special attention to the issue of customer choices “against the possibility of technological breakthroughs and whether cost savings would be passed on to consumers,” Bloomberg reported.

Close scrutiny expected
Those in attendance at the March 31 conference in Washington took Baker’s comments, which he said reflected his own views and not those of any of the agency’s five commissioners, as a sign that regulators will closely scrutinize the proposed merger that also needs the the go-ahead from the U.S. Department of Justice.

However, in his speech, Baker suggested that the FCC may have to take its scrutiny a step further by analyzing its effect both on a nationwide level and on a city-by-city level. In Puerto Rico, where Telecommunications Regulatory Board President Sandra Torres has foretold the agency will oppose the deal, regulators would find that AT&T would significantly control the playing field, with some 1.4 million customers, or roughly 52 percent of the market.

Also saying that the AT&T/T-Mobile merger “faces a very steep climb” to win his approving vote is Michael Copps, one of three Democrats steering the FCC. His colleague, Mignon Clyburn, said encouraging competition should be a top-of-mind consideration when reviewing the transaction. Their two votes, along with that of FCC Chairman Julius Genachowski, are necessary for the deal to move forward.

The snowballing concern over the effects of the merger has also echoed in Congress, where the Senate Judiciary Committee has already announced that it will hold a hearing May 11 to analyze its potential impact on the telecom market.

In Puerto Rico, the deal requires authorization from the Telecommunications Regulatory Board who’s President Sandra Torres has foretold it will oppose.

Defending the deal
As those who oppose the proposed transaction go public with their concerns, AT&T’s chief lobbyist, James W. Cicconi, is said to be quietly maneuvering about Congress lining up allies behind what would be the fourth major wireless merger in the U.S. in the last decade.  Cicconi is AT&T’s senior executive vice president for external and legislative affairs and oversees a division that spent $115 million on lobbying over the last six years, The New York Times reported last month.

In its story, the Times described Cicconi as a “master strategist … who internalizes the art of regulatory and legislative war,” and who will apply his 13 years of experience at AT&T to push the deal that would expand the carrier’s subscriber base to 130 million. Over the years, AT&T has reportedly contributed generously to the campaign efforts of 390 representatives and 70 senators.

The AT&T/T-Mobile transaction should be submitted to the FCC in coming days, industry sources told News is my Business.

Leave a Comment

comm comm comm