Earlier today, The US House Judiciary Intellectual Property, Competition, and the Internet Subcommittee held a hearing “How Will the Proposed Merger Between AT&T and T-Mobile Affect Wireless Telecommunications Competition?” Following is a summary on what has happened since the merger was first announced.
On March 20, AT&T announced that it will acquire T-Mobile USA from Deutsche Telekom AG for $39 billion. Before this merger can be completed, it must be approved by both the Federal Communications Commission (FCC) and The United States Department of Justice, which work together on complex merger cases. The Department of Justice does set a timetable for its investigation, but it will likely take many months. To pass the FCC, AT&T must submit an application to review the transaction as a complex merger case. The rough timeline for the FCC to complete a review of a complex merger is approximately 180 days, but for a case of this size will likely be longer. For example, the FCC review process in the Comcast and NBC Universal merger took 234 days to complete and it took the FCC 294 days to review the Century Link and Qwest merger. AT&T submitted a public interest statement to the FCC on April 21, 2011 and submitted its application on April 28, 2011. Currently, the transaction is in the public comment phase. For updates on the FCC’s progress, you can check the timeline and view public documents here.
When AT&T first announced the merger with T-Mobile, the Washington Post reported that, “the FCC and the Justice Department have expressed some concerns that consumers do not have enough choice among wireless carriers.” Since then, the FCC has released this order on April 7th, which “requires facilities-based providers of commercial mobile data services to offer data roaming arrangements to other such providers on commercially reasonable terms and conditions, subject to certain limitations.” The order states that “only AT&T and Verizon Wireless oppose the Commission’s adoption of a data roaming requirement,” and that “after carefully considering the arguments in the record, we conclude that it will serve the public interest to adopt a data roaming rule.” In response, Verizon has filed a suit against the FCC. This is a good indication of how the FCC will approach the proposed merger and that even as a competitor, Verizon will likely benefit from a consolidated market.
To address concerns from its customers, T-Mobile released a blog post on March 20, 2011 and this letter on March 25, 2011, shortly after the merger was announced. On May 11, T-Mobile CEO Philipp Humm testified before Senate Judiciary Committee, Subcommittee on Antitrust, Competition Policy and Consumer Rights where he detailed the benefits of a merger in his introductory remarks. In the same session, AT&T Chairman, CEO and President, Randell Stephenson testified before the Senate where he outlined how the merger would benefit consumers .
As a competitor in the wireless industry, Sprint has put up strong opposition to the merger. Sprint CEO, Dan Hesse’s testimony argued that , “takeover will create a duopoly, providing ‘Twin Bells’ with control of approximately 80 percent of wireless industry revenues.” Supporting Hesse’s argument was Cellular South CEO, Victor Meena, who also testified against the proposed merger. In addition to Hesse’s testimony, Sprint has supported the NOTAKEOVER Project, a coalition formed to stop the merger. Another group effort is led by the Center for Media Justice and the Media Action Grassroots Network to “ensure low-income and working Americans are represented in the heated debate over the proposed takeover.” Prior to AT&T’s announcement, Sprint and T-Mobile were the two parties rumored to be considering a possible merger .
Also in opposition to the merger is Leap Wireless, which operates Cricket Communications. AT&T CEO Randell Stephenson mentioned Leap three times in his aforementioned testimony, however according Leap VP of Government Affairs, Russ Merbeth, “they haven’t been running any of that past us.” This press release from Leap Wireless was not released until May 24, 2011, 13 days after Stephenson’s testimony to the Senate Judiciary Committee.
To defend itself from the opposition, AT&T has started a series of blog posts on its public policy blog. Joan Marsh, AT&T Vice President of Federal Regulatory, has contributed three entries in the “busting myths” series. These entries address spectrum efficiency, spectrum holdings, and Sprint’s pricing. The blog series also has an entry on wireless backhaul written by Bob Quinn, AT&T’s Senior Vice President-Federal Regulatory and Chief Privacy Officer. The most recent entry by Marsh states “Sprint should stop complaining and keep competing, something they’ve been quite successful at as of late.”
If you are an AT&T or T-Mobile customer, CNET’s Marguerite Reardon has written this article, which outlines what the merger likely means for customers if it goes through. However, for the time being nothing will change while the FCC and Department of Justice review and investigate the agreement. Reardon has also written this piece, which outlines the regulatory hurdles of the proposed merger.
In its press release, AT&T states that it expects the transaction will close in “approximately 12 months.” Many agree that the proposed merger will be allowed by both the FCC and Department of Justice, but that it will come with many concessions.
Here is a recap of this morning’s hearing. Stay tuned for more updates on the merger!