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Review of acquisition is set to be lumped together with review of proposed Qualcomm spectrum acquisition

AT&T Inc. (T) bids to acquire Deutsche Telekom AG's (ETR:DTE) T-Mobile USA and Qualcomm Inc.'s (QCOM) spectrum are set to be scrutinized together, when the U.S. Federal Communications Commission decided Monday to tie the review of the two deals together.

The decision came in the wake of a request by AT&T and Qualcomm for the FCC to speed up its review of the pending spectrum acquisition.

The FCC writes:

The Commission's ongoing review has confirmed that the proposed transactions raise a number of related issues, including, but not limited to, questions regarding AT&T's aggregation of spectrum throughout the nation, particularly in overlapping areas. As a result, we have concluded that the best way to determine whether either or both of the proposed transactions serve the public interest is to consider them in a coordinated manner at this time.

The T-Mobile deal was widely viewed as the "riskier" deal, given that the head of the U.S. Senate's antitrust subcommittee, Senator Herb Kohl (D-Wisc.), has already advised that the deal be blocked [source: PDF].  Senator Al Franken (D-Minn.) also opposed the merger, which he warned would create an "effective duopoly".

Representative Lamar Smith (R-Texas, 21st District), head of the House Judiciary Committee, and Senators Mike Lee (R-Utah) and John Cornyn (R-Texas) have voiced support [1][2] of the deal.  Sen. Cornyn is the ranking Republican on the U.S. Senate antitrust subcommittee.  House Democrats have been divided on the issue [1][2].

Both Rep. Smith and Sen. Cornyn have accepted relatively large campaign donations [1][2] from AT&T.  Sen. Al Franken accepted major campaign contributions [source] from Time Warner Cable, Inc. (TWC), a rival of AT&T (though not in the mobile space).  Sen. Kohl who opposes the merger, and Sen. Lee who supports it did not accept any major donations from AT&T or its rivals.  In total AT&T has paid almost $500,000 USD to its House supporters, though as Sen. Franken's donation from TWC illustrates, AT&T's rivals may be donating in the reverse direction.

The unused Qualcomm spectrum purchase has largely flown under the radar, with most voicing indifference or support.  However, a handful of critics have claimed that the acquisition is part of a broader effort by AT&T to hoard spectrum.

The dual review may be a signal that the FCC is going to examine the spectrum issues in greater detail that previously thought.  AT&T will likely opt to focus more on this issue now that it's the subject of an individual review, versus how it might approach a more comprehensive review in which spectrum was just one of many issues.  Ultimately this may mean a bit more work for AT&T.

The deals may be approved or disapproved of, separately, though, on the basis of spectrum.  Writes the FCC, "Thus, the Commission is not at this time taking the further step of formally consolidating the two transactions."

The FCC says that it may review other aspects of the deals, separately, down the road.  This has both upsides and downsides for AT&T.  The upside is that AT&T could in theory win approval for a modified T-Mobile deal, even if the FCC disapproves of the deal from a spectrum standpoint.  The bad news for it is that the T-Mobile deal could be rejected on other grounds, even if the spectrum acquisition involved is authorized.


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My prediction: Dog and Pony Show
By Fox5 on 8/9/2011 1:55:55 PM , Rating: 3
I bet they're just refocusing the issue as "ATT needs spectrum to better serve the consumer!" and not as a "ATT buying TMobile reduces competition!"

By refocusing the Tmobile buyout purely as a "ATT needs spectrum", I bet this deal will be rapidly passed through and completely ignore any of the competition related issues. Why else bundle the Qualcomm deal (not really opposed and almost certain to be approved) with the Tmobile deal (highly contest)?




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