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AT&T - T-Mobile: A Solution to Many Problems
Submitted by Scott Cleland on Mon, 2011-03-28 18:38
Despite Sprint and Clearwire opposing the proposed AT&T-T-Mobile acquisition, expect the DOJ and FCC to approve it, because the DOJ appreciates the facts of vibrant wireless competition and because the FCC will come to appreciate how the transaction actually helps solve many of the FCC's highest priority problems.
As a veteran analyst, who has closely covered most all of the roughly two dozen major communications mergers since the 1996 Telecom Act, it is easy to cut through the critics' standard, hyperbole and histrionics -- that they use to attack every major communications merger -- to get to the rub of this matter.
Like I blogged that the Comcast-NBCU merger would get approval when the hyperbole and histrionics were similarly over the top and not credible, this acquisition ultimately will gain government approval.
I. Competitive Facts
In all of the previous analogous communications transactions to this one, the DOJ has analyzed them by local geographic market, not by national market as opponents suggest in their criticism. As AT&T has indicated, and the CTIA confirms in its research, there are 5+ wireless competitors in 18 of the top 20 markets and there are four in most other relevant markets.
Opponents' "Ma Bell duopoly" political/PR frame of this transaction shows that opponents have already conceded defeat on the facts at the DOJ. It also shows they are already focusing most all their efforts on persuading the FCC to extort concessions under the FCC's amorphous "public interest" test, which is basically whatever three votes at the FCC say it is at any point in time.
The competitive facts overwhelmingly support approval of the acquisition.
II. A Solution to Many Problems
Universal Broadband: After the President pledged in January: "within the next five years, we'll make it possible for businesses to deploy the next generation of high-speed wireless coverage to 98% of all Americans." and after the FCC made universal broadband deployment the signature goal of the FCC in its National Broadband Plan to Congress in 2010, it is hard to imagine the FCC blocking a clearly legal transaction that actually fulfills with great fanfare what the President and FCC have said they most want to do in this sector.
Spectrum Exhaust: After the FCC has repeatedly stated publicly that mobility is the communications future, and that the problem of spectrum exhaust is real and imminent, it is hard to imagine the FCC blocking a legal transaction that helps mitigate the most immediate problem for consumers at risk from the consequences of spectrum exhaust, i.e. higher prices for high bandwidth usage to reduce demand and stave off spectrum exhaust.
Accelerating Broadband Adoption: Given the FCC's National Broadband Plan goals of accelerating broadband adoption, it is hard to imagine the FCC blocking a legal AT&T-T-Mobile transaction that would result in much faster broadband adoption with combined resources and synergies than would occur with AT&T and T-Mobile remaining separate. Moreover, the transaction would bring the iPhone to T-Mobile customers who otherwise would not gain access to it.
Promoting Economic Growth & Competitiveness: After the President instituted a new Executive Order to promote economic growth and competitiveness via a regulatory system of "least burdensome regulation," it is hard to imagine the FCC employing maximally burdensome regulation by blocking a legal transaction that transfers $21b in revenues and scarce spectrum resources from foreign control to U.S. control.
In sum, the DOJ is not going to block this transaction because the facts don't merit it and the DOJ has tried and true targeted remedies that can mitigate any anti-competitive effects around the edges that they may find in their review.
The FCC is also not going to block this transaction when it helps the FCC solve many of its highest priority problems.