FCC May Hinder AT&T T-Mobile Merger

AT&T may have a hard time convincing the US Federal Communications Commission that the announced T-Mobile acquisition would be in the public’s best interest.

Last week, AT&T and T-Mobile announced their plans to merge into one company in a $39 billion deal, which would make AT&T the largest mobile operator in the United States with 129 million subscribers. The deal, however, must first be approved by the FCC, and apparently it’s going on be an uphill battle to get approval.

An FCC source told the Wall Street Journal, “There’s no way the chairman’s office rubber-stamps this transaction. It will be a steep climb to say the least,” he said, adding that the regulatory body would have to thoroughly examine the proposal and see if the acquisition would be in the public’s best interest. Democratic majority members of the FCC in particular are wary of the deal and are expressing concern over the state of competition in the US mobile market.

On its end, AT&T doesn’t seem too worried, “We understand that Congress, the DOJ, the FCC, as well as wireless consumers will have questions about the transaction. We look forward to answering and addressing those questions,” said AT&T spokesman Michael Balmoris to the WSJ. “We are confident that the facts will demonstrate that the deal is in the public interest and that competition will continue to flourish.”

If the deal goes through, AT&T would not only dominate the wireless market, but would be the only provider that runs on GSM network. Verizon and Sprint use a different standard called CDMA, reports TGDaily. The FCC will argue that AT&T is trying to control the entire mobile market, and will advance anti-trust laws designed to protect competition, to try to divert the sale.

A lot is at stake with this FCC approval that could take up to a year to complete. If the deal isn’t approved, AT&T will have to provide T-Mobile with $3 billion, it promised in cancellation payout, reports the Inquirer.  Customers, on their end, are worried that decreased competition will lead to higher prices.

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