updated 04:15 pm EST, Tue November 22, 2011
FCC believes hearing needed on ATT merger
The FCC during a call Tuesday said it would conduct a hearing on the validity of AT&T's proposed buyout of T-Mobile. Its agenda would follow after the conclusion of the Department of Justice lawsuit, if it doesn't block the merger, and would be conducted as a "trial-type" case. Opponents like Sprint could participate, and sides would have to bring witnesses as well as carry supportable evidence, the FCC said.
Investigations would be conducted side-by-side with the DOJ case, but they couldn't be brought to the FCC until later. A draft for the hearing order had already been proposed, but it wouldn't be explored by the full agency commission until December 13 or later. It wouldn't wait for a regularly scheduled meeting, the regulator said.
In holding the call, the FCC also made its first definitive statements doubting AT&T's point of view on the merger. After going through more than 30 meetings with the two merging carriers, studying 200,000 pages of documents, and receiving 50 petitions asking the FCC to block the merger, it couldn't agree with AT&T's point of view on face value, the agency said. It believed a merger "can't possibly serve the public interest" since it concentrated far too much of the cellular industry into one company.
Along with the antitrust violations the DOJ believed would come from the merger, the FCC refused to accept AT&T's position that the merger would create jobs. Its view of historical evidence echoed that of Sprint's endorsed study, which showed that virtually every large merger in the past had led to job cuts, not creation, as companies eliminate overlapping roles. AT&T itself has admitted to there being "synergies" in the deal, or places where the two would streamline their business.
A call for a hearing casts further doubt on the likelihood that the merger will be completed. Both DOJ lawsuits and FCC hearings are rare for mergers by themselves, and combined suggest near uniform distrust of AT&T's arguments. Alongside job issues, a potentially fatal document came from AT&T itself, in which an internal January estimate determined that the carrier only needed $3.8 billion for its LTE rollout, not the $39 billion takeover of the fourth-largest national carrier. AT&T has maintained that it still needs the full takeover and that there are extra benefits, but it has never directly explained the $3.8 billion figure or how it determined that it needed more.
In a brief response, AT&T's Senior VP of Corporate Communications, Larry Solomon, said the hearing was "disappointing." The provider was "reviewing all options" as to what it could do, he added.
AT&T did get a minor victory, however, in the FCC saying it would likely approve Qualcomm handing over its 700MHz wireless frequency license to AT&T, giving it more bandwidth for its LTE network. A vote is still upcoming.