AT&T Lashes Back at FCC


AT&T (NYS: T) has just called a flagrant foul against the Federal Communications Commission. It would be an egregious understatement to say the company is angry at the agency for releasing a report highly critical of its proposed merger with T-Mobile. Livid. Enraged. Really, really, really pissed off, would be more accurate.

The report in question, a redacted version made public Monday, basically shot holes in all the rationales AT&T had advanced that the merger would be in the public interest:

AT&T Claims

FCC Report

Would not be anticompetitive.

"... raises significant competitive concerns ..." and "... material questions of fact ..."

Would lower wireless prices.

"... their claim that the proposed transaction would result in lower wireless industry prices is flawed ..."

Would create synergies that would lower costs.

"[If synergies are realized] ... would likely result in reduced service quality."

Would create 96,000 new jobs.

"We cannot find that the transaction would lead to a net increase in U.S.-based jobs."

AT&T's retort
Here are some excerpts from AT&T's statement in response to the FCC, which will give the general tenor of the company's concern:

  • "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 ..."

  • "In our view, the report raises questions as to whether its authors were predisposed."

  • "This is clearly not the fair and objective analysis to which any party is entitled, and which we have every right to expect."

  • "We believe that the utter absence of balance is clear, and demonstrates that the document lacks all credibility."

A steep climb for merger-hood
Even before the FCC's scathing appraisal was released, the merger seemed doomed. Last August, the Department of Justice filed an antitrust lawsuit against the proposal, and earlier this month the FCC chairman proposed putting the application before an administrative hearing. That latter action caused AT&T to hurriedly withdraw the application from the FCC - early Thanksgiving morning, no less.

Then the report came out. The FCC said it released it for transparency's sake. AT&T obviously thinks differently.

The merger proposal does raise anticompetitive issues. It would create a duopoly of AT&T and Verizon (NYS: VZ) controlling about 80% of the wireless market in the U.S., a fearsome prospect certainly for Sprint Nextel (NYS: S) , which would find itself an even more distant third in a two-horse race.

To counter those concerns, and to try and placate the Department of Justice enough to settle its case, AT&T has been attempting deals with other carriers to take some of T-Mobile's customer accounts and wireless spectrum. Leap (NAS: LEAP) is one possibility, MetroPCS (NYS: PCS) is another. So far, nothing on that front.

AT&T works in mysterious ways
AT&T has made a serious callout to the FCC, still one of the entities (the DOJ is the other) whose approval it would need to go through with any wireless marriage. Does that mean the company is throwing up its hands in frustration -- or is this some kind of strategy that we, as ordinary mortals, fail to grasp?

Want to keep up with AT&T? Just put the company on the Fool's My Watchlist:

  • Add AT&T to My Watchlist.

At the time thisarticle was published Fool contributorDan Radovskyowns shares of AT&T. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.