The Federal Communications Commission announced on Monday the reformation and modernization of the Lifeline program. The revamped program will ensure affordable phone service is available to low-income families. Lifeline is a “universal service program that fulfills Congress’s mandate to ensure the availability of communications to all Americans.” The percentage of low-income households with phone service has increased dramatically since the program began in 1985, from 80% to nearly 92% last year. The FCC is looking to create a number of databases and protocols to end carrier abuse of the program. One such measure will be the creation of an eligibility database from governmental data sources to automate eligibility of initial and ongoing Lifeline participants. The move will “reduce the potential for fraud while cutting red tape for consumers and providers.” Lifeline is set to be revamped by no later than the end of 2013.
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MetroPCS, U.S. Cellular and several other regional carriers have requested that the Federal Communications Commission initiate a “shot clock” for roaming agreements with larger wireless carriers. “Supporters stressed that imposing a shot clock on negotiations is necessary to provide the proper incentive for potential roaming partners to timely respond to inquiries,” a lawyer representing the regional carriers said in a letter to FCC Secretary Marlene H. Dortch. “Although data roaming negotiations may involve complex issues, the Joint Supporters emphasized that other situations that incorporate shot clocks, such as interconnection and siting negotiations, also have the potential to involve complex issues, and yet, a shot clock still has been successfully implemented in those negotiations.” In other words, the smaller wireless carriers want larger carriers to stop stalling when it comes to negotiating roaming deals in areas where regional carriers provide connectivity and to instead “engage in good faith negotiations.”

[Via FierceWireless]

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Sprint has granted LightSquared six more weeks to gain approval from the Federal Communications Commission to launch its network. This is the second time the carrier has extended it deadline for LightSquared to prove to the FCC that its network does not interfere with GPS systems. There has been quite a battle going on between LightSquared and the government, however. LightSquared and a former FCC engineer have argued that the carrier’s 4G LTE network, which Sprint plans to use to help roll out its LTE service more quickly, was unfairly tested at higher power levels than the network will actually operate at and that testing was “rigged.” The company also said that those who tested its network would benefit from the FCC’s possible decision to prevent it from operating. “Sprint and LightSquared have agreed to extend our network agreement through mid March,” LightSquared said in a statement to BGR. “Sprint continues to support our business plan to bring wireless broadband to more than 260 million Americans and our ongoing efforts to work with regulatory agencies to resolve interference concerns.” LightSquared now has until March to gain the FCC’s blessing to operate.

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Democratic Representative Edward Markey of Massachusetts released a draft of his cell phone privacy bill on Monday. The Mobile Device Privacy Act is designed to protect consumers from tracking software such as Carrier IQ, which caused an uproar late last year when it was discovered to be secretly monitoring 150 million smartphone users. The bill would require companies to disclose the use of such tracking software and clarify exactly what information the software collects. Customers would have to consent to any data collected or transmitted, and third parties would have to file applications with the Federal Trade Commission and the Federal Communications Commission to ensure the data is being transmitted securely. “Consumers have the right to know and to say ‘no’ to the presence of software on their mobile devices that can collect and transmit their personal and sensitive information,” said Markey when speaking to The Hill. Markey serves on the House Energy and Commerce Committee and is the co-chairman of the Congressional Privacy Caucus.

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AT&T’s Senior Vice President-Federal Regulatory and Chief Privacy Officer Bob Quinn recently wrote a post on the company’s blog that called Sprint out for deciding to use roaming agreements, and “disinvesting” in its own network in Kansas and Oklahoma instead of providing customers with access to its network. As it turns out, the Federal Communications Commission originally prevented carriers, under the Home Market Rule, from creating roaming agreements when they had the spectrum or the ability to use their own networks. However, as Quinn explains, the rule was overturned in 2010 and is currently undergoing an appeals process.

Post updated below with a comment from a Sprint spokesperson.

So what makes AT&T so mad about Sprint’s decision to use someone else’s network? AT&T doesn’t think the decision makes any sense; Sprint argued the move was made in an effort to cut costs and focus on its smartphone users, but AT&T thinks Sprint should follow in AT&T and Verizon’s footsteps and focus on building out its network capacity instead.

“I mean, at AT&T we have spent a lot of time and money investing in recent years racing to keep up with our subscribers’ surging broadband demands precisely because those demands are growing so rapidly,” Quinn wrote. “Verizon has been doing the same in building its own 4G LTE network. But at Sprint, the logic is different, and investment – Sprint investment – does not appear to be the solution. My guess is that Kansas and Oklahoma represent the tip of tip of the iceberg here. Does this represent the beginning of Sprint’s Disappearing Network Vision? Will this disinvestment story go nationwide and appear in your local paper soon?”

Quinn also appears to have some issues with the FCC, which allowed Sprint to make the changes in the first place. “We remain hopeful that the Court will reject the FCC’s market intervention here and realize that this regulation actually disincents investment by everyone in the marketplace at a time when promoting investment and job growth should be priority #1 for every policymaker in this country,” Quinn said.

UPDATE: Sprint spokesman John Taylor posted the following response in the comments section of this post:

AT&T has it facts wrong.

Sprint hasn’t moved any customers off of its network. These customers in certain rural areas of Oklahoma and Kansas were long served by a roaming partner. The change Sprint announced simply notified customers of that fact.

Roaming agreements benefit consumers because carriers can extend their network footprints. They also benefit carriers, even AT&T.

AT&T, for its part has more unused spectrum than any other carrier in the country. They’ve also under invested in the AT&T network on a per subscriber basis when compared to the rest of the industry by a wide margin. That’s what makes the criticism from AT&T’s lobbyist especially rich.

For many years, the FCC has required wireless carriers to negotiate “just and reasonable” rates for voice roaming — now it is requiring the same for data roaming. For consumers, this means you can check email, surf the Net and use other data services wherever you travel in the U.S.

That’s why the entire wireless industry, with the exception of AT&T and Verizon, supports the FCC’s move.

High data roaming prices may benefit AT&T and Verizon shareholders, but they’re bad for consumers and competition.

John Taylor
Public Affairs
Sprint

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In a memo released on Friday, the National Space-Based Positioning, Navigation and Timing Executive Committee said the nine federal agencies that make up the body have concluded unanimously that none of LightSquared’s proposals would overcome the network’s interference with GPS technologies. The announcement comes as a crushing blow for the startup, which is looking to build an LTE network with the company’s 1600MHz frequency. Preliminary testing last year showed that LightSquared’s planned network interfered with GPS. After a handful of rebuttals, changes, and more testing, the government has decided to pull the plug and request no further testing. The Federal Aviation Administration also concluded the network would interfere with aircraft safety systems.”Based upon this testing and analysis, there appear to be no practical solutions or mitigations that would permit the LightSquared broadband service, as proposed, to operate in the next few months or years without significantly interfering with GPS. As a result, no additional testing is warranted at this time,” the memo said. LightSquared slammed the decision, claiming the agency has a biased agenda that is in favor of the GPS industry. Late last year, LightSquared reiterated that the GPS industry is at fault and it demanded approval from the FCC to begin deploying its network.

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LightSquared has asked NASA’s inspector general to investigate whether or not an advisor to federal agencies has conflicts of interest that make it unfair for him to determine whether or not LightSquared’s 4G LTE network interferes with GPS networks. The advisor was named as Bradford Parkinson, who works both as a vice chairman of Trimble Navigation, an industry board that advises federal agencies on GPS technology, and also as a Stanford University professor, The Wall Street Journal said Friday. “His involvement on both has been known by everyone involved since concerns of GPS interference by LightSquared were raised,” a GPS coalition spokesperson Dale Leibach told The Wall Street Journal. Read on for more.

In December, federal officials from the Department of Transportation and the Department of Defense said that LightSquared’s 4G LTE network still interferes with GPS signals, but LightSquared has argued that a new antenna developed in partnership with PC-TEL resolves most of the FCC’s concerns. The company currently has a contract to provide Sprint with part of its new 4G LTE network, but LightSquared must gain FCC approval to validate the terms. LightSquared was originally given until the end of 2011 to gain approval but Sprint, on January 3rd, said it will give the company another 30 days to get a blessing from the FCC. Unfortunately, The Wall Street Journal explained that LightSquared must now gain approval from the Department of Defense before it can convince the FCC its technology is harmless to GPS networks.

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Now that its bid to acquire T-Mobile USA for $39 billion has been put to bed by strong opposition, AT&T has to look elsewhere in an effort to find spectrum that will accommodate the carrier’s ever-growing subscriber base while it transitions to LTE. The carrier is clearly facing an uphill battle but it took a sizable step forward on Thursday evening when the Federal Communications Commission granted approval to AT&T’s proposed acquisition of 700MHz spectrum licenses from Qualcomm. ”This spectrum will help AT&T continue to deliver a world-class mobile broadband experience to our customers,” said AT&T SVP-Federal Regulatory Bob Quinn. AT&T will pay Qualcomm approximately $1.9 billion when the deal closes in the next few days, and the licenses AT&T gains cover more than 300 million people in the United States. AT&T’s press release follows below.

AT&T Receives Regulatory Approval for Purchase of Wireless Spectrum from Qualcomm

Dallas, Texas, December 22, 2011

 

AT&T* announced today that it has received all required regulatory approvals for AT&T’s acquisition of spectrum from Qualcomm. AT&T is purchasing 700 MHz spectrum licenses covering more than 300 million people for approximately $1.9 billion.

“This spectrum will help AT&T continue to deliver a world-class mobile broadband experience to our customers,” said Bob Quinn, senior vice president-Federal Regulatory, AT&T. “We appreciate the FCC Chairman, the Commissioners and their staff for completing its review before the holidays.

“As spectrum is the lifeblood of the U.S. wireless industry, we are pleased that the FCC did not reduce the spectrum screen, however, we continue to believe any changes to the process by which it is allocated should be subject to open and transparent public discussion and clear to everyone with an interest in ensuring the health of our industry.”

The companies expect to close the transaction in the coming days.

LightSquared on Tuesday issued a letter to the Federal Communications Commission ostensibly demanding approval to build out its 4G LTE network. LightSquared executive vice president of regulatory affairs and public policy Jeff Carlisle argued that the GPS industry has had almost 10 years to address issues that cause GPS satellite signals to partially transmit on spectrum that LightSquared has licensed. The letter was written in response to an announcement earlier this week from federal officials, stating that they were still concerned about interference LightSquared’s network causes with GPS equipment after conducting a new investigation into the matter. “LightSquared has had FCC authorization to build its network for over eight years and that authorization was endorsed by the GPS industry, and fully reviewed and allowed to proceed by several other government agencies,” Carlisle wrote in the letter. “Commercial GPS device-makers have had nearly a decade to design and sell devices that do not infringe on LightSquared’s licensed spectrum. They have no right to complain in the eleventh-hour about incompatibility when they had ample opportunity to avoid this problem.” A link to LightSquared’s full letter follows below.

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Federal investigators have launched a probe in order to examine Carrier IQ’s smartphone software, which tracks a range of activity and sends certain data to wireless carriers without users’ knowledge. Carrier IQ executives met with officials from both the Federal Trade Commission and the Federal Communications Commuission on Tuesday, The Washington Post reports. “We are complying with all investigations at this time as we have nothing to hide,” said Carrier IQ representative Mira Woods. “We have been completely transparent through this process.” Read on for more.

Security researcher Trevor Eckhart recently pulled Carrier IQ back into the spotlight after the firm’s software first ruffled feathers back in September. Carrier IQ says its software “collects enough information to understand the customer experience with devices on our network and how to devise solutions to use and connection problems,” but Eckhart shed light on the scope of data collected by Carrier IQ, which may include personal data, location data and even key strokes.

Allegations that the Federal Bureau of Investigation may also be using Carrier IQ software to spy on smartphone users arose on Tuesday when the FBI denied a Freedom of Information Act request for materials related to the Carrier IQ scandal. A number of manufacturers and carriers have commented on whether or not they use Carrier IQ software, but the statements have done little to calm a concerned public or prevent a new wave of lawsuits.

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AT&T said Monday that it, along with Deutsche Telekom, has asked Judge Ellen Huvelle to delay any further court hearings regarding AT&T’s planned $39 billion acquisition of T-Mobile USA until January 18th, 2012. AT&T said the delay will “allow the two companies time to evaluate all options” and that the U.S. Justice Department also joined in on the filing. AT&T recently withdrew its merger application from the FCC to instead focus on the lawsuit that was brought against the merger by the Department of Justice. “AT&T is committed to working with Deutsche Telekom to find a solution that is in the best interests of our respective customers, shareholders and employees,” AT&T said in a statement. “We are actively considering whether and how to revise our current transaction to achieve the necessary regulatory approvals so that we can deliver the capacity enhancements and improved customer service that can only be derived from combining our two companies’ wireless assets.” The delay makes a lot of sense, since the Department of Justice doesn’t have much of a reason to sue AT&T unless it has a merger application filed with the FCC. ”It’s not a real transaction until they file with the FCC,” Justice Department lead attorney Joseph Wayland said last week. AT&T’s full press release follows after the break. 

AT&T UPDATES STATUS OF T-MOBILE USA MERGER

DALLAS, December, 12, 2011 – AT&T today issued the following statement regarding the status of its merger with T-Mobile USA:

“AT&T and Deutsche Telekom advised Judge Huvelle this morning that they wish to stay any further Court proceedings until January 18, 2012, to allow the two companies time to evaluate all options.  The U.S. Department of Justice joined in the filing.

“AT&T is committed to working with Deutsche Telekom to find a solution that is in the best interests of our respective customers, shareholders and employees.  We are actively considering whether and how to revise our current transaction to achieve the necessary regulatory approvals so that we can deliver the capacity enhancements and improved customer service that can only be derived from combining our two companies’ wireless assets.”

AT&T has issued a scathing letter in response to the FCC’s decision to release a staff report on its findings surrounding AT&T’s planned $39 billion acquisition of T-Mobile USA. “We expected that the AT&T-T-Mobile transaction would receive careful, considered, and fair analysis,” Jim Cicconi, AT&T Senior Executive Vice President of External & Legislative Affairs, said. “Unfortunately, the preliminary FCC Staff Analysis offers none of that. The document is so obviously one-sided that any fair-minded person reading it is left with the clear impression that it is an advocacy piece, and not a considered analysis… The report cherry-picks facts to support its views, and ignores facts that don’t. Where facts were lacking, the report speculates, with no basis, and then treats its own speculations as if they were fact.” Read on for more.

Updated with statement from Sprint

Cicconi also addresses assumptions made by the FCC that AT&T would expand its LTE footprint to cover 97.4% of Americans even without the merger, despite AT&T’s claims that this isn’t the case, and said that such expansion combined with the purchase of T-Mobile USA will kill competition in rural areas. AT&T says that very argument even contradicts President Obama’s pledge to deploy mobile broadband to 98% of Americans.

The FCC believes that AT&T will expand its LTE network to cover 55 million additional Americans over the next six years according to its plan, but that the expansion will not create jobs. Cicconi points to FCC’s own broadband fund, which will only provide broadband to a far fewer number of Americans (7 million) but will somehow create “500,000 jobs and $50 billion in economic growth” over a six-year period. Also, despite reports that the merger would raise prices, AT&T points to a recent FCC Report on Wireless Competitionwhich says the average rate per voice minute dropped from $0.18 to $0.05 between 2000 and 2009 and that the average rate per text message dropped from $0.04 to $0.01 since 2006.

“Over the past several years, no company has invested more in the United States than AT&T,” Cicconi said. “In our merger with T-Mobile, we made commitments to invest additional billions—investments made possible because of the merger. We also face spectrum constraints of a nature and magnitude faced by no other carrier as we strive to provide services everyone concedes are vital. In this circumstance, we understood the issues such a combination might raise, and we made clear, publicly and privately, our readiness to address those concerns. We are still ready to do so.” Cicconi’s full response follows below.

AT&T Response to FCC Staff Report

We expected that the AT&T-T-Mobile transaction would receive careful, considered, and fair analysis.   Unfortunately, the preliminary FCC Staff Analysis offers none of that.  The document is so obviously one-sided that any fair-minded person reading it is left with the clear impression that it is an advocacy piece, and not a considered analysis.

In our view, the report raises questions as to whether its authors were predisposed.  The report cherry-picks facts to support its views, and ignores facts that don’t.  Where facts were lacking, the report speculates, with no basis, and then treats its own speculations as if they were fact.  This is clearly not the fair and objective analysis to which any party is entitled, and which we have every right to expect.

All any company can properly ask when they present a matter to the government is a fair hearing and objective treatment based on factual findings.  The FCC’s report makes clear that neither occurred on our merger, at least within the pages of this report.  This has not been our past experience with the agency, which lets us hope for and expect better in the future.  Here are examples of what we are describing:

Expanding LTE to 97% of the U.S. Population 

The report states, based purely on speculation, that AT&T will expand its LTE deployment from 80% of the population to 97.4% even without the merger.  The report says this will occur because AT&T will be forced to do so by competition, despite documents and sworn declarations by AT&T to the contrary.  To argue this, the report apparently assumes a high enough level of competition exists in rural areas to compel billions of dollars in investment.  Yet the report elsewhere argues that the level of wireless competition in more populated areas of America is so fragile that the merger must be disallowed.  At the very least, these conclusions show a logical inconsistency.

This discounting of AT&T’s firm commitment on broadband deployment is even more inexplicable given that the President of the United States, in his 2011 State of the Union speech, said it was vital for the nation to deploy mobile broadband to 98% of all Americans.  It appears the FCC did not inform the President that in their view this was not a needed or worthy objective because it was apparently going to happen anyway.

The report also seemed to pay no mind to the FCC’s own National Broadband Plan which called the building out of mobile broadband to rural areas a national imperative.  Again, the report’s argument is that rural buildout is not really an issue to be taken into account in our merger because it will occur anyway.  This is at odds with virtually every FCC and Administration statement of the past year when it comes to rural buildout, and in our view demonstrates how far the report’s authors were willing to go in order to ignore every single benefit of our merger with T-Mobile.

Job Gains Versus Losses

Because the report effectively concludes that the billions of additional investment promised by AT&T to deploy 4G LTE mobile broadband service to 55 million more Americans over the next six years will occur anyway, it concludes those billions will create no new jobs and spur no new investment by others.  Yet, just two weeks ago the FCC announced that its new $4.5 billion broadband fund, which will help to deploy wireline broadband to a much smaller number of Americans–7 million– over the same time period, will create “approximately 500,000 jobs and $50 billion in economic growth over this period.”  This notion — that government spending on broadband deployment creates jobs and economic growth, but private investment does not—makes no sense.  Conversely, if the FCC had applied to its own broadband fund the same analysis it used for our merger-related investments, the result would be similar—zero new broadband, zero jobs, zero growth.

After discounting the job-creating impact of AT&T’s LTE and other investments, the report asserts that the merger will cost jobs despite public commitments AT&T has made to address this very concern, including the following:

§ Commitment that the merger will not result in any job losses for U.S.-based wireless call center employees of T-Mobile or AT&T who are on the payroll when the merger closes;

§ Commitment to bring 5,000 wireless call center jobs back to the U.S. that today are outsourced to other countries;

§ Commitment that T-Mobile’s non-management employees whose job functions are no longer required because of the merger will be offered another position in the combined company. 

Deutsche Telekom, T-Mobile’s Parent, Has Serious Investment Constraints

The report simultaneously discounts the capital investment necessary for AT&T to keep its commitment to build LTE to more than 97% of the U.S. population while speculating that T-Mobile will invest heavily in future years despite direct evidence, and sworn declarations by Deutsche Telekom, indicating that T-Mobile must develop into a self-funding platform due to extensive capital demands in Europe.  T-Mobile has no clear path to LTE.  Indeed, this path has become even more difficult over the past several months due to explosive data demands on current network systems as well as the rapid pace of innovation and buildout of LTE by T-Mobile’s competitors.  By doing this, the report blatantly ignores facts, and instead substitutes speculation and hypotheticals – treating them as if they were fact.  Any fair person, however, knows the difference.  

Spectrum

The FCC has made a national issue of the spectrum crisis the U.S. faces, and has made addressing this shortage the basis of its requests for incentive auction authority.  Yet the report barely mentions any spectrum issue, much less the spectrum crisis previously identified by the FCC, although that is the primary reason driving AT&T’s need for this merger. The report seems to discount the significant spectrum constraints faced by AT&T, including an 8,000% increase in data traffic on our network over the past four years, even though we have submitted volumes of evidence documenting these constraints.

In addition, the report claims “the record is silent” with respect to capacity constraints faced by T-Mobile, even though Deutsche Telekom submitted a sworn declaration explaining those constraints.  Deutsche Telekom also noted that the volume of data traffic on T-Mobile’s network has doubled every seven months, with 4G device customers using more than 1 gigabyte of data per month on average.  In short, the report’s authors find this evidence inconvenient, and simply claim it does not exist.

Surely, it is neither fair nor logical for the FCC to trumpet a national spectrum crisis for much of the past year, and then draft a report claiming that two major wireless companies face no such constraints despite sworn declarations demonstrating the opposite.

The report also claims the AT&T-T-Mobile transaction would result in an increase in spectrum concentration that is unprecedented in its scale.  This is simply inaccurate based on the FCC’s own published data, which clearly shows that Sprint-Clearwire has more spectrum today than the combined company would have post-merger.  Again, the report manipulates its own spectrum data to support its preferred conclusion.  

Competition

The report’s competitive analysis willfully ignores critical facts about the wireless market, and distorts the evidence presented.   A few of the many examples:

§ The report acknowledges that in past transactions the FCC has said the market for mobile wireless services is local, and repeated that conclusion in its Mobile Competition Report issued this year. Now, though, the report’s authors have concluded it was “not necessary” to assess the impact of the merger in local markets, effectively ignoring competition from, among others, U.S Cellular, Leap, and Metro PCS, all of which have a higher market share than T-Mobile in numerous major markets across the U.S.

§ The FCC’s Mobile Competition Report this year concluded that 90% of all Americans have a choice of five or more facilities-based wireless carriers, not including competition from resale providers.  Yet the draft report on our merger dismisses the significance of the FCC’s own official finding in assessing the competitive impact of our merger.

§ The report understates the spectrum holdings of regional providers.  Instead of showing their average spectrum holdings in the markets they serve, the report calculates their average holdings across all markets– including markets they don’t serve.  This creates the false impression that regional carriers have insufficient spectrum to serve customers in the markets in which they operate.   This is an obvious attempt to manipulate data to support the report’s conclusion. 

§ The report hinges its analysis on its characterization of T-Mobile as a critical “disruptive force” in the industry. But it fails even to mention that for the past two years T-Mobile has been losing customers despite growing demand across the industry; it has no clear path to building an LTE network; and that its parent company, Deutsche Telekom, has said T-Mobile will have to become self-funding.  This failing is magnified when one considers that the report treats companies such as Leap and Metro PCS, which have gained market share over this same time period, as though they do not even exist.

§ The report finds that the loss of T-Mobile as an independent purchaser of backhaul could lessen competition in the provision of backhaul.  The Justice Department did not even see fit to include this claim in its lawsuit and, when raised by Sprint, it was dismissed by the U.S. District Court as unsupported by any facts.   Amazingly, the report does not even acknowledge evidence in the record that just last month Sprint announced that it had awarded backhaul contracts at 25,000 cell sites and “will end up with 25 to 30 significant backhaul providers” and that “it could still build its own backhaul  facilities,” if necessary.  Further, just months ago the FCC concluded, in its separate special access proceeding, that it had insufficient data about available services, numbers of competitors or pricing to reach any conclusions.  Yet somehow, the draft report was uninhibited by that same lack of data in supporting Sprint’s contentions that the loss of T-Mobile as a purchaser of backhaul affects Sprint’s ability to obtain backhaul  from the 25-30 sellers of backhaul  capabilities with whom Sprint has independently contracted for services.

Conclusion

We have summarized here only a portion of the infirmities we see in the FCC’s report.  We would encourage all observers to read the report itself.  We believe that the utter absence of balance is clear, and demonstrates that the document lacks all credibility.  The decision to issue such a report that has no legal status, without a vote of the Commission, and in a proceeding that has been withdrawn, was also without precedent, and underscores that this was intended more for advocacy and to impact public perceptions.  And neither is a proper basis for action by a regulatory agency.

If our economy is to recover and once again create jobs, major private-sector investment will be required.  Over the past several years, no company has invested more in the United States than AT&T.   In our merger with T-Mobile, we made commitments to invest additional billions—investments made possible because of the merger.  We also face spectrum constraints of a nature and magnitude faced by no other carrier as we strive to provide services everyone concedes are vital.  In this circumstance, we understood the issues such a combination might raise, and we made clear, publicly and privately, our readiness to address those concerns.  We are still ready to do so.

UPDATE: Sprint’s official response to AT&T’s letter is as follows:

The FCC staff’s Analysis and Findings provide a careful, substantive analysis of AT&T’s proposed takeover of T-Mobile, consistent with the FCC’s role as the independent, expert agency responsible for such merger reviews.  Rather than accept the expert agency’s Analysis and Findings, AT&T has chosen to make baseless claims about the FCC’s process.  Let’s not forget that it was AT&T who tried to game the process by requesting to withdraw its merger application in the pre-dawn hours of Thanksgiving.  AT&T can’t have it both ways: either it wanted to have an application that would be judged on the merits or it didn’t. We agree with AT&T on one point however: the public should read the Analysis and Findings on AT&T’s proposed takeover.

The Federal Communications Commission released a 109-page report on Tuesday evening that provides a great deal of insight into what the government agency thought of AT&T’s planned acquisition of T-Mobile USA. However, AT&T has questioned exactly why the government agency decided to release the report since, hours before the report was released, AT&T successfully withdrew its merger application. The FCC said that the acquisition would give AT&T a “unilateral incentive” to increase its prices, which could have had an echo effect on the industry should Sprint and Verizon Wireless follow suit, The Wall Street Journal reported. Read on for more.

AT&T promised the deal would create thousands of jobs and that it would bring back 5,000 call center jobs from overseas. The Communications Workers of America also argued the merger could create as much as 96,000 jobs for Americans. Even still, the FCC argued in the report that the acquisition would “result in a net loss of direct jobs.” As one might imagine, AT&T isn’t pleased with the FCC’s decision to release the report.

“The FCC has recognized that it is required by its own rules to dismiss our merger application,” AT&T senior executive vice president of external and legislative affairs Jim Cicconi said. “This makes all the more troubling their decision to nonetheless release a preliminary staff report on the merger. 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. It has no force or effect under law, which raises questions as to why the FCC would choose to release it. The draft report has also not been made available to AT&T prior to today, so we have had no opportunity to address or rebut its claims, which makes its release all the more improper.”

AT&T decided to withdraw its application to acquire T-Mobile USA to instead focus on a lawsuit brought against the merger by the Department of Justice. That case is expected to begin in February. Should AT&T win, it’s expected that the carrier will re-apply for the merger’s approval with the FCC.

The Federal Communications Commission on Tuesday granted AT&T permission to withdraw its application to purchase T-Mobile USA for $39 billion. Two public policy groups, Public Knowledge and Media Access Project asked the FCC to publish its documents relating to the deal and to prevent AT&T from rescinding its application, although it appears it’s too late for that to happen. AT&T announced its intention to withdraw its application to purchase T-Mobile USA on November 24th when it explained that it was going to instead focus on a lawsuit brought against it by the Department of Justice. That case is expected to kick off in February. Should AT&T win, it is likely the wireless carrier will re-file its application with the FCC and begin its acquisition process all over again. Public Knowledge and Media Access Project have argued that AT&T will have unfairly exhausted the resources of its competitors by the time it re-files for the merger.

AT&T may propose to divest as much as 40% of T-Mobile USA’s assets in an effort to win approval from the Department of Justice in an upcoming lawsuit against the government agency. The DOJ sued to block the merger on August 31st, when it said “AT&T’s elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market.” AT&T is planning to divest a lower percentage of spectrum and a higher share of T-Mobile USA’s customers, Bloomberg said Monday. The divestiture may not be enough to add balance to the market, however. “It’s unlikely that the DOJ would allow a big competitor like Verizon to purchase the assets,” Macquarie Securities analyst Kevin Smithen told Bloomberg, which means AT&T may need to rely on smaller regional carriers to pick up the customers and spectrum.

“[DOJ] guidelines require that any settlement or remedy replace the market power T-Mobile currently brings to the marketplace,” Sprint’s spokesperson for public policy John Taylor wrote on his personal blog. “Any new entity would have to create a nationwide network comparable to T-Mobile’s, which covers 97% of America… [and] offer exclusive handsets, just as T-Mobile does each year. AT&T would have to divest enough T-Mobile customers to ensure that any new entity or purchaser of the assets would have the same market share T-Mobile enjoys.”

Wall Street isn’t so sure the divestiture will help AT&T’s cause, either. “Realistically, AT&T is going to take its chances in court in February,” Sanford C. Bernstein analyst Craig Moffet said. “It’s all or nothing.”

On November 24th, AT&T withdrew its original application from the FCC to acquire T-Mobile USA and said it will instead focus on its lawsuit with the Department of Justice, which kicks off in February, before it reapplies for the FCC’s approval of the acquisition.

Read [Bloomberg] Read [John Taylor]