FCC report says AT&T, T-Mobile submitted flawed information regarding merger

Posted:
in iPhone edited January 2014
A recently released staff report from the Federal Communications Commission claims AT&T and T-Mobile failed to prove that their proposed merger was in the public interest, even noting that the carriers had submitted inaccurate information to the commission.



AT&T and T-Mobile parent company Deutsche Telekom announced in March a $39 billion deal that would see the No. 2 and No. 4 U.S. carriers merge. The deal was quickly met with regulatory opposition, with the Department of Justice going so far as to sue to block the acquisition in August.



Last week, the FCC weighed in when Chairman Julius Genachowski called for an administrative hearing to address the merger. Genachowski also expressed his belief that the deal was against the public interest.



AT&T and T-Mobile responded by withdrawing their application with the FCC, ostensibly to focus on the DoJ lawsuit.



The agency on Tuesday formally accepted the applicants' withdrawal and released the findings of its staff analysis. The commission's staff report found "significant competitive concerns" surrounding the transaction and raised "substantial and material" questions about the potential effects on roaming, wholesale, and resale services, backhaul and handsets. The staff also disagreed with the applicants' claim that the merger would lead to lower prices while also creating more jobs.



After a thorough analysis of the potential effects of the merger, the commission's staff maintained that the applicants "have failed to carry their burden of proving that the proposed transaction, on balance, will serve the public interest."







"Staff further finds that the bulk of the Applicants' proffered benefits are inadequately supported by the data supplied, achievable through means other than the elimination of a competitor, or otherwise not cognizable under the Commission's public interest standard," the report concluded.



FCC commissioners spoke out in support of the staff's findings. Commissioner Mignon L. Clyburn said in a statement on Tuesday that the agency released the report in order to "promote federal agency transparency" and to allow outside parties, which have spent "considerable time and resources" responding to information requests, to see the completed analysis.



She added that the report could also be helpful to AT&T and T-Mobile as they reevaluate their application. The carriers have said they are ?continuing to pursue" the acquisition and plan to resubmit an application to the FCC.



"Despite repeated claims that this transaction will be a significant job creator, the staff, after thorough review, could make no such finding," Commissioner Michael J. Copps wrote in a statement regarding the report.



Copps also voiced concerns that the acquisition of T-Mobile would eliminate a carrier targeting "budget-conscious consumers," potentially pricing out lower-income customers. According to him, AT&T had provided "no guarantee that the new entity will continue to serve this population."



The commissioner went on to discourage AT&T and T-Mobile from resubmitting its application. "I would hope the withdrawal is not a strategic gambit along the road to resubmission of this or a similar application in the months ahead," he said.



However, the Associated Press reports that AT&T's top lobbyist, Jim Cicconi, was troubled by the FCC's decision to release the report.



"This report is not an order of the FCC and has never been voted on. It is simply a staff draft that raises questions of fact that were to be addressed in an administrative hearing, a hearing which will not now take place," he said. "It has no force or effect under law, which raises questions as to why the FCC would choose to release it."



Shortly after the acquisition was announced this spring, reports emerged that the carriers would face opposition from the FCC. "There's no way the chairman's office rubber-stamps this transaction. It will be a steep climb to say the least," an agency official told The Wall Street Journal off the record.



AT&T now appears to be preparing for the worst. The company announced last week that it will take a $4 billion charge this quarter in case it has to pay fees to Deutsche Telekom should the deal fall through. AT&T is said to have agreed to a $3 billion break-up fee and the possible forfeiture of "several billion dollars" worth of wireless spectrum allotments.
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Comments

  • Reply 1 of 36
    Really. Who would have guessed this wouldn't have benefited the people by taking away competition
  • Reply 2 of 36
    I'm glad that the FCC disclosed the finding because I believe AT&T withdrew to keep it from the public. I don't use AT&T mainly because they have never treated their customers fair. I have Verizon and they aren't any better but I still need a cell phone.
  • Reply 3 of 36
    So if T-Mobile continues to lose share and Deutsche Telekom decides to part them out or scuttle the entire operation, how would that help competition?
  • Reply 4 of 36
    Quote:
    Originally Posted by F1Ferrari View Post


    So if T-Mobile continues to lose share and Deutsche Telekom decides to part them out or scuttle the entire operation, how would that help competition?



    They can be brought by company who will take over the brand. AT&T was trying to buy the customers. But if you have been reading the news t mobile has been adding customers lately
  • Reply 5 of 36
    tylerk36tylerk36 Posts: 1,037member
    Remember Xingular? ATT bought them. And where is Xingular now? Xingular was the first iPhones carrier. I would suspect that ATT has similar hunger pains for T-Mobile. I wonder, if ATT buys T-Mobile will T-Mobile cease to exist eventually?



    Maybe there is a reason why Apple never made an iPhone for T-Mobile. Maybe they saw the merger coming.



    I would bet that Verizon is lobbying in DC to get this deal with ATT and T-Mobile 86'd.
  • Reply 6 of 36
    ufwaufwa Posts: 64member
    Quote:
    Originally Posted by tylerk36 View Post


    Remember Xingular? ATT bought them. And where is Xingular now? Xingular was the first iPhones carrier. I would suspect that ATT has similar hunger pains for T-Mobile. I wonder, if ATT buys T-Mobile will T-Mobile cease to exist eventually?



    Maybe there is a reason why Apple never made an iPhone for T-Mobile. Maybe they saw the merger coming.



    I would bet that Verizon is lobbying in DC to get this deal with ATT and T-Mobile 86'd.



    I never heard of Xingular.



    Cingular which was formed by SBC and bellsouth (which were baby bells) bought AT&T wireless then took back the old AT&T name.
  • Reply 7 of 36
    Quote:
    Originally Posted by tylerk36 View Post


    Remember Xingular? ATT bought them. And where is Xingular now? Xingular was the first iPhones carrier. I would suspect that ATT has similar hunger pains for T-Mobile. I wonder, if ATT buys T-Mobile will T-Mobile cease to exist eventually?



    Maybe there is a reason why Apple never made an iPhone for T-Mobile. Maybe they saw the merger coming.



    I would bet that Verizon is lobbying in DC to get this deal with ATT and T-Mobile 86'd.



    Actually, AT&T didn't buy Cingular. It was singular who bought AT&T, which in turn, turned into SBC Global. SBC Global then bought AT&T and rename themselves AT&T. It's really confusing, but the PARENT AT&T (Ma Bell) company died many years ago and one of its little ones (Baby Bells) took over the parent company and took over the name as well. AT&T today is a result of many complicated purchases of many different companies.
  • Reply 8 of 36
    Quote:
    Originally Posted by Sector7G View Post


    But if you have been reading the news t mobile has been adding customers lately



    Their last quarterly report had them gain 126,000 customers, but that's after losses of 129,000 customers in the first 2 quarters. Last year they lost 23,000 in the 4th quarter. With the iPhone 4S release, and Sprint added as an iPhone carrier, I doubt their 4th quarter numbers will be much different than 2010, but that's speculation on my part.
  • Reply 9 of 36
    bwikbwik Posts: 555member
    This was neat in a broader sense because the US hasn't been enforcing our anti-trust laws for many years. This merger was so obviously textbook illegal that finally somebody woke up after decades of slumber. I come from the airline industry which was studied in beautiful sophistication by economists in the 1970s-80s. As were railroads. The math, and the laws, on monopoly are nothing new and people will always reach for the precious. Either the govt is there to slap their hand away, or they get ahold of the precious and make their money. The richest man in the world is Carlos Slim, who runs the Mexican cell phone business. Food for thought
  • Reply 10 of 36
    tylerk36tylerk36 Posts: 1,037member
    Quote:
    Originally Posted by ufwa View Post


    I never heard of Xingular.



    Cingular which was formed by SBC and bellsouth (which were baby bells) bought AT&T wireless then took back the old AT&T name.



    Ok lets get real technical. cingular used the X in their name. Xingular. Ok do you understand now? Sorry you must have missed it.
  • Reply 11 of 36
    Quote:
    Originally Posted by F1Ferrari View Post


    So if T-Mobile continues to lose share and Deutsche Telekom decides to part them out or scuttle the entire operation, how would that help competition?



    Quote:
    Originally Posted by F1Ferrari View Post


    Their last quarterly report had them gain 126,000 customers, but that's after losses of 129,000 customers in the first 2 quarters. Last year they lost 23,000 in the 4th quarter. With the iPhone 4S release, and Sprint added as an iPhone carrier, I doubt their 4th quarter numbers will be much different than 2010, but that's speculation on my part.





    http://www.t-mobile.com/company/Inve...iewArchive=Yes

    t- mobile financial statements are posted on their website in PDF. Profits are down but they are not in the red.
  • Reply 12 of 36
    Quote:
    Originally Posted by tylerk36 View Post


    Ok lets get real technical. cingular used the X in their name. Xingular. Ok do you understand now? Sorry you must have missed it.



    Didn't they had that awful orange X logo that looked like someone fell off a building and splatter all over the sidewalk?
  • Reply 13 of 36
    Quote:
    Originally Posted by bwik View Post


    This was neat in a broader sense because the US hasn't been enforcing our anti-trust laws for many years. This merger was so obviously textbook illegal that finally somebody woke up after decades of slumber. I come from the airline industry which was studied in beautiful sophistication by economists in the 1970s-80s. As were railroads. The math, and the laws, on monopoly are nothing new and people will always reach for the precious. Either the govt is there to slap their hand away, or they get ahold of the precious and make their money. The richest man in the world is Carlos Slim, who runs the Mexican cell phone business. Food for thought



    Wow, I can't believe you spoke. Pray tell, what exactly IS the state of each of those industries today? Geez, I can't imagine that the utter failure in both these segments could have anything to do with over zealous government meddling, over taxation, and over regulation now could it?
  • Reply 14 of 36
    Quote:
    Originally Posted by ljocampo View Post


    I'm glad that the FCC disclosed the finding because I believe AT&T withdrew to keep it from the public. I don't use AT&T mainly because they have never treated their customers fair. I have Verizon and they aren't any better but I still need a cell phone.



    Not only is verizon customer {non} service less palatable than horse shit, but I daresay their clearly superior network is not as glorious as it once was when compared today with At&t's. The latter has spent tens of billions of dollars over the last 4 years building out their network, and it's pretty clear today that it is paying off.



    Seriously, the inane asshats at Verizon are about as praiseworthy as Comcast's imbecilic blowhards. After 8 long years of customer disservice with V, I left and suffered through the early years with the iPhone on AT&T. 5 years hence, all I can say is AT&T has me as a customer for a very long time if they keep treating me as well as they have thus far. Oh, and the service is pretty darn solid these days too.
  • Reply 15 of 36
    Quote:
    Originally Posted by Sector7G View Post


    They can be brought by company who will take over the brand. AT&T was trying to buy the customers. But if you have been reading the news t mobile has been adding customers lately



    I agree with F1Ferrari; by intervening with the free market system the FCC has now proved itself to be the savior of the masses - protecting us from a monopolistic environment where higher prices were inevitable, and job losses apparently guaranteed. In the mean time T-Mobile hemorrhages post-paying subscribers, and adds a few prepaid numbers to redeem their figures somewhat (a somewhat pitiful figure if I remember correctly), and has blatantly decried no intentions of developing their current network - allowing all that precious spectrum go to waste. A little further back in the gallery, MVNO's like tracfone, who are extremely dependent on AT&T's network start recalculating the amounts of leverage they have at the bargaining table for spectrum with the big blue carrier, seeing that AT&T will obviously have less.

    In short, job losses will be imminent anyway the way T-Mobile is currently faring. The low cost providers AT&T are providing with spectrum will no longer be low cost due to AT&T's spectrum shortage. DT's worded claim that they won't invest in T-Mobile means a whole lot of spectrum goes to waste.
  • Reply 16 of 36
    Quote:
    Originally Posted by macwise View Post


    Wow, I can't believe you spoke. Pray tell, what exactly IS the state of each of those industries today? Geez, I can't imagine that the utter failure in both these segments could have anything to do with over zealous government meddling, over taxation, and over regulation now could it?



    Given the fact that other countries have the same issue without the American "meddling" you state, given the fact that oil went up massively since 1970 and given the fact that American railroads haven't exactly been given much priority government-wise, as compared to Japan, Germany, China or France (Shinkansen, ICE, TGV, etc)... yes, it could have nothing to do with such highly questionable reasons.



    It could even be argued that insufficient regulation from the US govt is actually at fault.



    My personal belief is that transportation industries being highly critical to a nation's productivity, should be highly subsidized, if not nationalized altogether. It should also be heavily audited. This works for other sectors, such as health or communications. Having the iPhone is not a life necessity. Being reachable cheaply might save your life. Hence, there should be a solution, either a "low cost" heavily subsidized plan, which is more of a social-liberal solution, or a national governmental agency offering the service, which is more of a communistic solution.



    Both ways, the problem you refer to is "overmeddling" where the reality is that common people are not served properly and profits are skyrocketing for a while for some rich people, before entire industries die out for lack of research/investment. Those should be pushed by governement, because relying on Steve Jobs-like CEO's all over corporate America...'s not gonna work.
  • Reply 17 of 36
    "This report is not an order of the FCC and has never been voted on. It is simply a staff draft that raises questions of fact that were to be addressed in an administrative hearing, a hearing which will not now take place," he said. "It has no force or effect under law, which raises questions as to why the FCC would choose to release it."





    I think he brought up a legitimate point. That was confidential information the FCC threw out there for public consumption. Is the US government going to do that with your and my confidential information, too? I like to think they won't but events like this make me less certain.
  • Reply 18 of 36
    Quote:
    Originally Posted by AppleInsider View Post


    "Staff further finds that the bulk of the Applicants' proffered benefits are inadequately supported by the data supplied, achievable through means other than the elimination of a competitor, or otherwise not cognizable under the Commission's public interest standard," the report concluded.



    Couldn't the same be said of the government's budget or other governmental programs like Health Care, Social Security, etc.? Are not these 'proffered benefits inadequately supported by the data supplied'?!





    Quote:
    Originally Posted by AppleInsider View Post


    FCC commissioners spoke out in support of the staff's findings.



    But who evaluates the staff's findings to ensure it is correct? Really, one expects to believe something government says whether it comes from the politician, staffers, regulators, and such. Didn't politicians, based upon "findings" of staffers, state that their were no problems with Fannie Mae and Freddie Mac and the housing industry???



    Just say'n. Same Sad Song! I'm always leery of what comes out of politicians/bureaucrats mouths.

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  • Reply 19 of 36
    jexusjexus Posts: 373member
    Quote:
    Originally Posted by Dmerit View Post


    The low cost providers AT&T are providing with spectrum will no longer be low cost due to AT&T's spectrum shortage. DT's worded claim that they won't invest in T-Mobile means a whole lot of spectrum goes to waste.



    This has been refuted time and time again. AT&T has no spectrum shortage and is not even close to running out. Will you get this simple fact straight....
  • Reply 20 of 36
    Quote:
    Originally Posted by tylerk36 View Post




    I would bet that Verizon is lobbying in DC to get this deal with ATT and T-Mobile 86'd.



    Quite the opposite. Less competition down to a duopoly means they can fix and raise prices even more.
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