Last week, AT&T bowed to reality as it and Deutsche Telekom withdrew their transfer of control application from the FCC, reportedly as FCC Chairman Genachowski announced his recommendation that the Commission adopt an order designating the application for hearing. Cecilia Kang reports on the applicants’ surprising move.
Harold Feld of Public Knowledge maintains that under the FCC’s rules, AT&T may not be in a position to withdraw its application. On its Public Policy blog, AT&T contests this assertion, maintaining it withdrew the application prior to the FCC’s vote on the hearing designation order consistent with [Section 1.934(a)(1) of] the Commission’s rules. An FCC clarification may be forthcoming.
AT&T and Deutsche Telekom elected to focus on the DoJ antitrust lawsuit, minimizing the consequences of an adverse FCC order and, apparently, believing the FCC will grant a revised application after a favorable court decision or approved settlement. An article by Bloomberg’s Scott Moritz in and Serena Saitto projects that AT&T is preparing a much more aggressive settlement offer in terms of divesting T-Mobile spectrum and customers.
In my view, the proposed merger, with or without spectrum and customer divestitures, remains adverse to the interests of enterprise customers. AT&T and Verizon Wireless dominate the enterprise Wireless market. Substantial acquisitions of spectrum or customers or both by AT&T—from a current competitor—will only raise the competitive challenges facing other Wireless carriers, individually or collectively, to compete against the two major carriers in this market segment.
The same is true for the consumer postpaid market in which sales of sophisticated smart phones and tablets are bundled with service. In light of the FCC’s tolerance of exclusive handset arrangements between Wireless carriers and handset manufacturers, any further concentration of spectrum and customers in AT&T undermines competition in this market segment.