FCC Deals Setback To AT&T, Qualcomm Spectrum Licensing Deal

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The FCC decides to review AT&T's proposed acquisition of T-Mobile and Qualcomm spectrum licensing together.

The Federal Communications Commission dealt a blow to network operator AT&T by tying together the company’s proposed acquisition of rival carrier T-Mobile USA with a $1.9 billion deal that would see AT&T acquire some of Qualcomm’s spectrum licenses. The agency sent the letter to AT&T and Qualcomm executives on the last day of the 180-day review.

“Reflecting the interdependence of our ongoing review of the proposed transactions, we are stopping the Commission's informal 180-day clock for the above-referenced proposed transaction effective today,” Rick Kaplan, head of the FCC’s Wireless Telecommunications Bureau, wrote in the letter.

“We remain confident that the FCC will approve the license transfers as consistent with the public interest," AT&T said in a company statement, which also said that the company was satisfied that the FCC had “preserved the ability for the Qualcomm application to be resolved in advance of the T-Mobile application.”

Qualcomm also released a statement, which said the "FCC should approve the pending AT&T-Qualcomm spectrum sale now because of the clear benefits to the public from the sale that stand on their own and are totally unrelated to the proposed AT&T-T-Mobile merger."

The FCC has been evaluating for some time the relationship between this proposed transaction and AT&T's $39 billion bid for T-Mobile USA. The agency's ongoing review has confirmed that the proposed transactions raise a number of related issues, including, but not limited to, questions regarding AT&T's aggregation of spectrum throughout the nation, particularly in overlapping areas.

“As a result, we have concluded that the best way to determine whether either or both of the proposed transactions serve the public interest is to consider them in a coordinated manner at this time, without prejudice to independent treatment at a later date,” Kaplan wrote.

The California Public Utilities Commission is also looking into AT&T's proposed acquisition of T-Mobile in order to investigate, gather, and analyze information relevant to the proposed merger's effects on the California economy and California consumers. The CPUC will analyze whether to apply any conditions that would mitigate any California-specific effects of the merger, and whether the CPUC will need to take any further action.

In addition, the information the CPUC gathers will create a record that the state agency can relay to the FCC in conjunction with the FCC's review of the proposed merger. In the course of the review, the CPUC will hold public workshops and public participation hearings, and the regulators have set an “aggressive timeline” for this proceeding, with a target decision date in early October.

“This is pretty unheard of,” Brian O’Hara, a legislative director at the National Association of Regulatory Utility Commissioners, said in an interview with Bloomberg News. “California’s seems to be the most in-depth review. It’s amazing to me that the PUC is doing so much.”

In a letter to FCC Chairman Julius Genachowski, Consumer Watchdog, an organization that advocates for taxpayer and consumer interests, warned the commission against approving the merger. “T-Mobile customers who are forced to migrate to AT&T's network will have to buy new phones, agree to more expensive rate plans or cancel their contracts and pay a termination fee,” the group wrote. "Once known for its low prices, T-Mobile has already begun increasing its rates and decreasing options in anticipation of the merger.”

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