AT&T fires back at FCC staff report on T-Mobile deal

The FCC's report raises questions about the impartiality of the agency, an AT&T executive says

The U.S. Federal Communications Commission has invited questions about its impartiality with a staff report laying out concerns about AT&T's proposed acquisition of rival mobile carrier T-Mobile USA, AT&T said Thursday.

The FCC announced Nov. 22 that its staff had found the proposed US$39 billion deal to be contrary to the public interest, and on Tuesday, the FCC released its 157-page staff report laying out concerns about the merger, while also granting AT&T's request to pull back its application to transfer T-Mobile spectrum licenses.

AT&T fired back on Thursday, calling the staff report unfair and lacking in objectivity.

"We expected that the AT&T-T-Mobile transaction would receive careful, considered, and fair analysis," Jim Cicconi, AT&T's senior executive vice president of external and legislative affairs, said in a blog post. "Unfortunately, the preliminary FCC Staff Analysis offers none of that. The document is so obviously one-sided that any fair-minded person reading it is left with the clear impression that it is an advocacy piece, and not a considered analysis."

The report raises questions about whether its authors were "predisposed," he added. "The report cherry-picks facts to support its views, and ignores facts that don't," Cicconi said. "Where facts were lacking, the report speculates, with no basis, and then treats its own speculations as if they were fact. This is clearly not the fair and objective analysis to which any party is entitled, and which we have every right to expect."

The staff report "dispassionately" analyzed the facts of the merger, based on a 200,000-page record and the participation of more than 50 businesses and consumer groups, an FCC spokesman said. "The AT&T/T-Mobile merger would result in the single greatest increase in wireless industry consolidation ever proposed," he added. "The objective analysis concluded, like that of the Department of Justice and multiple state attorneys general, that the transaction would decrease competition, innovation and investment, and harm consumers."

The FCC, in the staff report, has ignored its own findings that 90 percent of U.S. residents have a choice of five or more mobile carriers, Cicconi's blog post said.

The report also discounts AT&T's promised 4G rollout, he added. AT&T has said the merger will allow it to roll out LTE mobile broadband service to 97 percent of U.S. residents, instead of the 80 percent that the company had planned. The FCC report dismisses this commitment based on "speculation" that AT&T would expand its network even without the merger, Cicconi said.

The FCC report also ignores job gains that would likely come as AT&T expands its network, Cicconi added. AT&T and supporters of the merger have argued that AT&T's promised $8 billion in network deployment spending would create up to 96,000 new jobs at AT&T and other companies. The FCC, in October, estimated that its new $4.5-billion-a-year broadband fund would create up to 500,000 jobs over six years, he noted.

"This notion -- that government spending on broadband deployment creates jobs and economic growth, but private investment does not -- makes no sense," he said. "Conversely, if the FCC had applied to its own broadband fund the same analysis it used for our merger-related investments, the result would be similar -- zero new broadband, zero jobs, zero growth."

The FCC staff report concluded that AT&T would roll out LTE service to close to the same number of people as it promised it would after the merger, largely due to AT&T's competition with Verizon Wireless and its expanding 4G network. The staff report suggested, therefore, that any job gains due to an expansion of AT&T's network could not be directly attributed to the merger.

The merger itself would lead to "massive" layoffs as AT&T eliminated duplicative workers, FCC staff have said.

Opponents of the merger defended the FCC. "The FCC staff report explains in meticulous detail why AT&T's claims on every issue were simply not credible," said Harold Feld, legal director of Public Knowledge. "The staff went into exhaustive analysis of AT&T's economic models, engineering plans, financial data and public statements to come up with its conclusion that the takeover is not in the public interest."

The FCC "went out of its way" to give AT&T opportunities to make its case, Feld added. "It is time for AT&T to move on."

AT&T's rebuttal of the staff report ignores the impact of the merger on the larger mobile marketplace, said Jeff Kagan, an independent tech and telecom analyst. "The weak part of AT&T's position is it is only concerned with AT&T," he said in an email. "Agreed, this merger with T-Mobile would be good news for AT&T; however, the problem is it would not be good for the industry."

The merger would create two mobile giants, AT&T and Verizon, with much more power than any other competitors, Kagan said. "That limited number of competitors will harm competition, increase prices and reduce innovation," he said.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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Tags antitrusttelecommunicationJim CicconiregulationmobileT-Mobile USAMergers and acquisitionsPublic KnowledgeJeff Kagan4g3gat&tlegalU.S. Federal Communications CommissionHarold Feldgovernmentbusiness issues

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