FCC chairman finds AT&T, T-Mobile merger not in public interest, seeks hearing
AT&T's proposed acquisition of competitor T-Mobile has been found by the FCC's chairman to be anticompetitive and not in the public interest, asks commissioners to vote for administrative hearing.
The chairman of the U.S. Federal Communications Commission, Julius Genachowski, released a draft order on Tuesday asking the other four commissioners to call an administrative hearing, saying that he found AT&T's proposed $39 billion deal to acquire rival T-Mobile contrary to the public interest, reports CNET.
Were the hearing to be approved, it would be yet another hurdle for the two telecoms to overcome as they currently face an antitrust suit from the U.S. Department of Justice. The onus would be on AT&T to prove that its purchase of T-Mobile would not create a possible duopoly in the wireless market, and refute claims that such an acquisition would negatively affect the American people.
However, FCC officials say that it is impossible to see how the merger would possibly serve the public, going on to note that it would create the largest single concentration U.S. mobile market in history.
"The FCC's action today is disappointing," said AT&T Senior Vice President of Corporate Communications Larry Solomon. "It is yet another example of a government agency acting to prevent billions in new investment and the creation of many thousands of new jobs at a time when the US economy desperately needs both."
An analysis conducted by FCC staff shows that the both telecoms have a dense population of customers in 99 out of the top 100 major U.S. markets, claiming that a merger would bring an "unprecedented" level of concentration to the wireless landscape.
The FCC report counters claims made by AT&T saying that the move would generate jobs and help the company roll out its 4G LTE network, noting that jobs would in fact be lost as redundant positions are cut. The commission also did not find evidence that a buyout would help hasten any proposed 4G broadband rollout.
FCC Chairman Julius Genachowski
The merger has seen strong resistance from Sprint, the nation's third-largest carrier, that culminated in a formal petition filed with the FCC in May protesting the acquisition.
Verizon, on the other hand, described AT&Ts acquisition of T-Mobile as inevitable, saying the government needs to pass legislation that solves an underlying problem of a limited wireless spectrum before regulating telecom mergers.
An administrative hearing is a rare occurence for the FCC, the most recent being the 2002 EchoStar/DirecTV merger, which ultimately ended in a scrapped deal.
If the four commissioners approve the hearing, it would have to wait until the conclusion of the DOJ trial, which is currently set to start in February 2012. If AT&T settles that case, the company would have to refile with the FCC, which would then reevaluate the new terms.
The chairman of the U.S. Federal Communications Commission, Julius Genachowski, released a draft order on Tuesday asking the other four commissioners to call an administrative hearing, saying that he found AT&T's proposed $39 billion deal to acquire rival T-Mobile contrary to the public interest, reports CNET.
Were the hearing to be approved, it would be yet another hurdle for the two telecoms to overcome as they currently face an antitrust suit from the U.S. Department of Justice. The onus would be on AT&T to prove that its purchase of T-Mobile would not create a possible duopoly in the wireless market, and refute claims that such an acquisition would negatively affect the American people.
However, FCC officials say that it is impossible to see how the merger would possibly serve the public, going on to note that it would create the largest single concentration U.S. mobile market in history.
"The FCC's action today is disappointing," said AT&T Senior Vice President of Corporate Communications Larry Solomon. "It is yet another example of a government agency acting to prevent billions in new investment and the creation of many thousands of new jobs at a time when the US economy desperately needs both."
An analysis conducted by FCC staff shows that the both telecoms have a dense population of customers in 99 out of the top 100 major U.S. markets, claiming that a merger would bring an "unprecedented" level of concentration to the wireless landscape.
The FCC report counters claims made by AT&T saying that the move would generate jobs and help the company roll out its 4G LTE network, noting that jobs would in fact be lost as redundant positions are cut. The commission also did not find evidence that a buyout would help hasten any proposed 4G broadband rollout.
FCC Chairman Julius Genachowski
The merger has seen strong resistance from Sprint, the nation's third-largest carrier, that culminated in a formal petition filed with the FCC in May protesting the acquisition.
Verizon, on the other hand, described AT&Ts acquisition of T-Mobile as inevitable, saying the government needs to pass legislation that solves an underlying problem of a limited wireless spectrum before regulating telecom mergers.
An administrative hearing is a rare occurence for the FCC, the most recent being the 2002 EchoStar/DirecTV merger, which ultimately ended in a scrapped deal.
If the four commissioners approve the hearing, it would have to wait until the conclusion of the DOJ trial, which is currently set to start in February 2012. If AT&T settles that case, the company would have to refile with the FCC, which would then reevaluate the new terms.
Comments
"contrary to the public interest"
"serve the public"
So what are stock holders and customers for? Companies that do not serve their customers go out of business. Is this deal breaking anti-trust law? Are the colluding? I goess the public interest is better served with t-mobile just going out of business and we can all pay for the bankruptcy proceedings.
So what are stock holders and customers for? Companies that do not serve their customers go out of business. Is this deal breaking anti-trust law? Are the colluding? I goess the public interest is better served with t-mobile just going out of business and we can all pay for the bankruptcy proceedings.
Why should a monopoly 'serve its customers'?
Now if they would only pay as much as attention to the NBC/Comcast travesty.
I suppose that will serve the 'public interest'......
You?re asking questions that go beyond the prevue of the FCC. They are looking at the effects of the telecommunications industry as a whole. Anti-trist and collusion are under the pervue of the FTC.
The FCC is a racket looking to get paid off. No laws broken. None pointed out that could potentially be broken (and you can't be convicted of might commit a crime in the future). No rules broken. I can't wait to see the list of "concessions" they are going to demand from the owners of both companies.
Why should a monopoly 'serve its customers'?.
What monopoly? The only one I see here is US Gov and its v. Marketplace.
I personally think that the larger a company gets the more disconnected from their customers they become.
Isn't Apple the largest company in the world?
Isn't Apple the largest company in the world?
Largest public by market cap.
T-Mobile will probably be sold anyway, and in all likelihood, for much less, if this deal does not go through.
I suppose that will serve the 'public interest'......
T-mobile being sold for less than ATT is paying is certainly more in the public interest than ATT buying it. You are aware that a company that is sold generally still operates, right? And if Deutsche Telecom receives less money in exchange, the American people are supposed to be sad?
T-Mobile as well owes its existence to an inexpensive license it acquired from the government to have exclusive use over a certain spectrum of public airwaves. Since the rest of the public lost its right to use it's airwaves, the use of public airwaves is supposed to benefit the public.
AT&T wants 4 billion dollars worth of spectrum, but is willing to over pay T-Mobile for the four billion worth of spectrum by paying it 39 billion dollars. According to AT&T's own internal documents, it plans to eliminate redundancy and eventually move T-Mobile customers to its higher paying plans. That doesn't seem in the public interest, and isn't a proper use of the public's airwaves.
Further, you have bought the whole T-Mobile is in trouble BS. According to T-Mobile's financial reports, T-Mobile is raking in billions in profit annually. It is in the black and not close to being in the red. According to the parent company, the US market is the most promising portion of its business because of the rapid acceleration of consumers to higher paying smartphone plans. Further, if the deal doesn't go through, AT&T is going to be paying T-Mobile some big dollars, which T-Mobile will get to invest in services. Again according to T-Mobile, its biggest problem is not having the iPhone. Once this proposed sale is killed, T-Mobile will likely be able to convince Apple to bring T-Mobile on board. Apple isn't going to incorporate a T-Mobile antennae into its phone if the company isn't going to be converted to the AT&T network. That would cost Apple development costs, that might not be recouped.
The Department of Justice's job is too make sure a publicly traded company doesn't engage in anti-competitive behavior. Buying an eighth of the market when it already owns about three eighths of the market puts most of the wireless market in two companies hands.
The government gave T-Mobile a non-transferable license to use the airwaves. To transfer the license T-Mobile needs government permission. T-Mobile hires about 40, 000 people in the US. It has over thirty million subscribers. If AT&T buys T-Mobile most of the T-Mobile employees will be put in the unemployment line, where you and I the taxpayer get to pay unemployment benefits for the next couple of years (in today's economy). The higher paying employees will likely be giving up things such as homes because in today's economy there is very little replacement work. Further, we will get to see all the abandoned T-Mobile stores join other abandoned stores, along with related local taxes, which help pay for things education, public safety, and other essential services. Moreover, overnight AT&T is given a monopoly on the GSM network, where people using expensive GSM handsets on T-Mobile have nowhere to go without having to buy a new handset.
This proposed deal stinks, and I am happy that the government is finally being pressured to act in the public's interest, and not yielding to the corporate lobbyists who normally would be buying off all the relevant government officials with promises of high paying jobs in the near future. If the lobbyist are failing in this regard, the opposition has to be incredibly strong.
Ps:
As a bankruptcy attorney, I can tell you the company filing the bankruptcy gets to pay for the bankruptcy. Further, T-Mobile is profitable and is too liquid to file bankruptcy.
So what are stock holders and customers for? Companies that do not serve their customers go out of business. Is this deal breaking anti-trust law? Are the colluding? I goess the public interest is better served with t-mobile just going out of business and we can all pay for the bankruptcy proceedings.
What monopoly? The only one I see here is US Gov and its v. Marketplace.
You are aware that a company that is sold generally still operates, right?
Wow! You don't say.....! I am so impressed by your erudition!
Wow! You don't say.....! I am so impressed by your erudition!
Then explain why you thought being sold to someone other than ATT for a lower price would somehow be harmful to consumers. Keeping an additional competitor around with lower prices, and who can still make a profit. Doesn't seem bad for consumers to me.
Then explain why you thought being sold to someone other than ATT for a lower price would somehow be harmful to consumers. Keeping an additional competitor around with lower prices, and who can still make a profit. Doesn't seem bad for consumers to me.
So, you want to maximize consumer surplus.
Well, then what you're proposing is that assets be sold to the lowest bidder, no?
Why should a monopoly 'serve its customers'?
Monopoly? So much for that big red map of the USA claiming "it's the network" that Verizon is always touting.
Sprint is just whining because they'll be last among the three national carriers, but how many regional carriers are out there to serve the people and who hook up with the national carriers for expanded coverage, albeit roaming. When the iPhone was offered to US Cellular and C-Spire, neither of which is in my locale (but nTelos is) so I never heard of these players in the telecom field until reading posts here in the Apple blogosphere.
The airlines are similar in that they have the big boys, some who are bigger than others, and in fact still consolidating through mergers like United and Continental. Then there are semi-national or regional ones like Southwest and Jet Blue, then there are multitudes of smaller regionals. Why is United and Continental being allowed to merge when every argument applied to the ATT/T-Mobile deal can be applied... 'monopoly' in certain cities and airport gates, reduction of flights due to overlap, loss of jobs because of redundancy... I think this government should butt out and apply Coolidge's perspective that "the business of America, is business"!
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The problem with your assessment is it rests on AT&T building itself up on its own dime using its own resources. The reality is AT&T build itself up originally on a government granted monopoly, and then partly on government subsidies, using licensed airwaves from the government. Furthermore, many local governments have given AT&T a monopoly in services such as DSL. AT&T has a history of buying companies only to raise the cost of service to the customers of the purchased company.
T-Mobile as well owes its existence to an inexpensive license it acquired from the government to have exclusive use over a certain spectrum of public airwaves. Since the rest of the public lost its right to use it's airwaves, the use of public airwaves is supposed to benefit the public.
AT&T wants 4 billion dollars worth of spectrum, but is willing to over pay T-Mobile for the four billion worth of spectrum by paying it 39 billion dollars. According to AT&T's own internal documents, it plans to eliminate redundancy and eventually move T-Mobile customers to its higher paying plans. That doesn't seem in the public interest, and isn't a proper use of the public's airwaves.
Further, you have bought the whole T-Mobile is in trouble BS. According to T-Mobile's financial reports, T-Mobile is raking in billions in profit annually. It is in the black and not close to being in the red. According to the parent company, the US market is the most promising portion of its business because of the rapid acceleration of consumers to higher paying smartphone plans. Further, if the deal doesn't go through, AT&T is going to be paying T-Mobile some big dollars, which T-Mobile will get to invest in services. Again according to T-Mobile, its biggest problem is not having the iPhone. Once this proposed sale is killed, T-Mobile will likely be able to convince Apple to bring T-Mobile on board. Apple isn't going to incorporate a T-Mobile antennae into its phone if the company isn't going to be converted to the AT&T network. That would cost Apple development costs, that might not be recouped.
The Department of Justice's job is too make sure a publicly traded company doesn't engage in anti-competitive behavior. Buying an eighth of the market when it already owns about three eighths of the market puts most of the wireless market in two companies hands.
The government gave T-Mobile a non-transferable license to use the airwaves. To transfer the license T-Mobile needs government permission. T-Mobile hires about 40, 000 people in the US. It has over thirty million subscribers. If AT&T buys T-Mobile most of the T-Mobile employees will be put in the unemployment line, where you and I the taxpayer get to pay unemployment benefits for the next couple of years (in today's economy). The higher paying employees will likely be giving up things such as homes because in today's economy there is very little replacement work. Further, we will get to see all the abandoned T-Mobile stores join other abandoned stores, along with related local taxes, which help pay for things education, public safety, and other essential services. Moreover, overnight AT&T is given a monopoly on the GSM network, where people using expensive GSM handsets on T-Mobile have nowhere to go without having to buy a new handset.
This proposed deal stinks, and I am happy that the government is finally being pressured to act in the public's interest, and not yielding to the corporate lobbyists who normally would be buying off all the relevant government officials with promises of high paying jobs in the near future. If the lobbyist are failing in this regard, the opposition has to be incredibly strong.
Ps:
As a bankruptcy attorney, I can tell you the company filing the bankruptcy gets to pay for the bankruptcy. Further, T-Mobile is profitable and is too liquid to file bankruptcy.
You might be insane. Seek treatment. Today's AT&T is Southwestern Bell aka SBC buying the AT&T long haul and wireless replacing AT&T wireless with their Cingular. Verizon even bought up parts of the oringal Ma'Bell broken up by the central planning committee you hold pure. Forget it. Go back to reading the works of Marx.
So, you want to maximize consumer surplus.
Well, then what you're proposing is that assets be sold to the lowest bidder, no?
Largest public by market cap.
Publicly traded != Public
The one that will be created when people such as myself who own expensive unlocked iPhones running on the T-Mobile network cannot take those expensive unlocked iPhones and go to a different carrier because these phones will only work on T-Mobile or AT&T's networks.
Redefine monopoly as you see fit. Perhaps a seat is available on the politburo.