FCC opposes AT&T takeover of T-Mobile

FCC draft staff analysis  PDF
The FCC

(Federal Communications Commission) has released a draft staff analysis of the proposed AT&T “merger” with T-Mobile. Happily, it opposes AT&T.

I expressed my misgivings about this proposed “merger” in October: AT&T wants the whole telecom pie (again).

This report certainly throws cold water on the proposed $39 billion deal, but ultimately the outcome of the anti-trust case that DOJ (Department of Justice) filed will decide whether the “merger” is anti-competitive. The trial begins in February. If AT&T loses, it must pay T-Mobile $4 billion, so expect AT&T to fight with tooth and nail.

This case twisted and turned last week. Marguerite Reardon, writing in CNET, clarifies events in her article AT&T and T-Mobile merger madness recap (FAQ).

The FCC draft report opens with:

We likewise now conclude, as reflected in the details of the analysis and findings below, that the Applicants have failed to meet their burden of demonstrating that the competitive harms that would result from the proposed transaction are outweighed by the claimed benefits. Staff thus finds, as has DOJ , that the proposed transaction would likely lead to a substantial lessening of competition in violation of the Clayton Act. A transaction that violates the Clayton Act would not be in the public interest. In addition, with respect to certain discrete alleged harms unique to the FCC`s public interest analysis, Staff finds that substantial and material questions of fact exist as to the nature and extent of those potential harms.

It doesn’t get brighter for AT&T. The FCC draft document closes with:

III. CONCLUSION
The Applicants submitted an Economic Model to demonstrate the price effects of their proposed transaction. Contrary to their assertions, the Economic Model does not provide any basis to conclude that there would be no harm to consumers. Instead, this Appendix shows that the Economic Model is unreliable. In addition, when given more reasonable inputs, the Economic Model shows that unilateral incentives are expected to cause prices to increase, harming consumers.

I’m happy with this conclusion. Are you?

Addendum: For comic relief, read AT&T Response to FCC Staff Report, which AT&T published on December 1. They’re not giving up without a fight, regardless of how absurd their arguments sound.

Visit my website: http://russbellew.com
© Russ Bellew · Fort Lauderdale, Florida, USA · phone 954 873-4695
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