AT&T's proposed $39 billion acquisition of rival carrier T-Mobile (News 
- Alert) hit a significant speed bump on Tuesday when the chairman of the Federal Communications Commission pushed to oppose the deal, noting that the merger would impair competition, increase prices for consumers and lead to considerable job losses, according to media reports.
FCC (News - Alert) chair Julius Genachowski on Tuesday notified fellow commissioners that he will look to send the case to an administrative law judge for review, traditionally the first step in an official opposition to a merger.
"The record clearly shows that -- in no uncertain terms -- this merger would result in a massive loss of U.S. jobs and investment," an unnamed FCC official told the New York Times.
The timing of the opposition to the deal – which comes several months after the Justice Department filed an antitrust lawsuit to block the merger – implies that the FCC was not pleased with AT&T's (News - Alert) recent responses to inquiries about how it would benefit the public interest.
AT&T has claimed that the deal would drive innovation, investment and job growth, but has clearly been unable to convince either the Justice Department or the FCC. When asked by regulators how many jobs will be added following the merger, AT&T noted that many positions will actually be eliminated, according to the Times.
Several lawmakers have also speculated that the deal, which would give AT&T and Verizon (News - Alert) nearly 80 percent of the wireless market, would spell the end for smaller carriers like Sprint. In fact, Sprint CEO Dan Hesse recently testified the proposed merger could force his company to eventually sell itself off to AT&T or Verizon.
The FCC also concluded that the deal would not result in the buildout of additional 4G wireless services, which would be the primary motivation for regulators to sign off on the deal. The Obama administration has publicly stated that it will look to expand high-speed broadband services to more than 98 percent of all Americans within the next five years.
AT&T immediately expressed its disappointment in the FCC's decision, noting in a statement that it is "yet another example" of the federal government standing in the way of innovation and job creation "at a time when the U.S. economy desperately needs both."
Jim Cicconi, AT&T's top executive for external and legislative affairs, also commented on the seemingly hypocritical nature of decision, considering the FCC has been bragging that its own $4.5 billion broadband expansion fund will create around 500,000 jobs.
"This notion, that when government spends money on broadband it creates jobs, but when a private company spends money it doesn't, is clearly wrong on its face," Cicconi told Reuters.
The FCC's opposition to the deal is major blow to AT&T even if the judge's decision falls in their favor. The FCC hearing won't occur until after the conclusion of the Justice Department's antitrust lawsuit, which doesn't begin until February. To make a long story short, the proposed merger is hanging by a thread.
Beecher Tuttle is a TMCnet contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.
Edited by Rich Steeves
