The FCC has stopped the clock on its review of AT&T’s proposed US$39bn acquisition of T-Mobile USA after AT&T came forward with new arguments in support of the deal. In a letter sent to Arnold & Porter, one of the legal firms advising AT&T, the chief of…
The FCC has stopped the clock on its review of AT&T’s proposed US$39bn acquisition of T-Mobile USA after AT&T came forward with new arguments in support of the deal.
In a letter sent to Arnold & Porter, one of the legal firms advising AT&T, the chief of the FCC’s Wireless Telecommunications Bureau Rick Kaplan said the regulator had stopped the clock until it had the information required to evaluate the new evidence.
The letter did not give specific details on the new information that AT&T will submit, saying only that AT&T was now “expressly relying” on these models to strengthen its arguments about the size of the efficiencies made possible by this deal, set against the potential effects on competition.
In an emailed statement AT&T described the new material as “additional economic evidence that further confirms the tremendous efficiencies and consumer benefits resulting from this transaction.”
Kaplan said that the clock on the review will be restarted when it received the new models in a form that allowed them to be adequately evaluated by the commission and by interested third parties.
The letter anticipated AT&T sending the updated information on 25 July.
Meanwhile, the chairman of the Senate’s subcommittee on antitrust, competition policy and consumer rights has come out strongly against the deal.
In a letter to FCC Chairman Julius Genachowski and the Attorney General, Democrat Senator Herb Kohl said that the deal “would likely cause substantial harm to competition and consumers, would be contrary to antitrust law and not in the public interest, and therefore should be blocked by your agencies”.
Kohl refuted AT&T’s arguments in favour of the deal.
AT&T has argued that the deal is necessary in order to improve its service offering, both by extending its LTE services to more of the American population and through the acquisition of more spectrum, which is required to deal with rapidly rising demand for mobile broadband.
But Kohl said that the company could improve its service offering without harming competition in the US telecoms market by investing part of the US$39bn that it was going to use for the acquisition.
He said there was “considerable doubt as to whether Sprint [Nextel] could survive as an independent competitor” to AT&T and Verizon Wireless.
The senator also warned regulators against allowing the deal, as long as it included with complex regulatory restrictions and rules.
He said: “A structural solution to the competition problems posed by the proposed acquisition – that is, simply prohibiting the proposed acquisition – is far preferable.”
An AT&T spokesperson said that the company respected Senator Kohl, but “we feel his view is inconsistent with antitrust law, is shared by few others, and ignores the many positive benefits and numerous supporters of this transaction”.
On the issue of the FCC stopping the clock on its review, AT&T said it was not surprised that the regulator needed to take time to consider its submission .
AT&T said that it did not expect the FCC’s action would adversely impact the timeframe for the approval of the transaction.
Separately, the COO and president of Verizon Communications has reportedly said that he expects the deal to be approved by regulators.
According to a Reuters report, Lowell McAdam said that the merger would probably go through.
He reportedly said that the deal made sense for AT&T, which needed more spectrum, and that it had not happened sooner was a surprise.
Verizon Communications holds a 55% stake in mobile operator Verizon Wireless, with British telco Vodafone holding the rest.
These comments stand in marked contrast to the mobile operator Sprint Nextel, which has criticised the deal, claiming it will harm consumers, competition and the US economy.
