AT&T/T-Mobile Deal: Dead at the FCC
The FCC issued a 109-page document that criticized the claims about job creation as well as other statements made in the AT&T merger application.
You cannot have missed the AT&T advertisements about the value of approving the merger with T-Mobile, advertisements that promoted job creation if the merger were approved: What is good for AT&T is good for the country. Of course that is always true.
AT&T advertised the potential generation of U.S. jobs, claiming 5,000 foreign jobs would come to the U.S and another 96,000 jobs would be created. But if you look at the history, AT&T has merged three times with other companies since 2002. The AT&T wireless division started with 70,000 employees before the mergers in 2002 and now employs 67,000 after the mergers.
"The Federal Communications Commission said AT&T's internal analysis and past practices contradict the company's claims that its merger with T-Mobile would create jobs, according to an agency report released Tuesday, November 29, 2011".
The FCC issued a 109-page document that criticized the claims about job creation as well as other statements made in the AT&T merger application to the FCC. The FCC found that the application contained elements that were "unreliable and at minimum raise[s] substantial and material questions of fact".
After the FCC determined that the deal would pose harm by increasing prices and forcing job losses--not job gains--the application was to be presented and discussed at an administrative hearing. This hearing was intended to produce greater analysis of the proposed merger. It would also make it almost impossible for the companies to reach their merger completion goal of September 2012.
The FCC report contradicts AT&T's claims that the merger is necessary to build an expanded high-speed network that could potentially reach 97 percent of the U.S. population. The report also suggests that in building out its own network without T-Mobile, AT&T would create more jobs than those created by the merger.
AT&T was facing two problems: The FCC and the Justice Department, both of which raised doubts about the merger's benefits. The FCC decided to release its report on the merger yesterday (November 29); AT&T protested the release because they had little time for review. The report was a draft and not a legal document, and AT&T argued that the agency should have kept it private.
However, the FCC said that the merger would harm consumers. The FCC report stated that "There are serious questions whether the merger of AT&T and T-Mobile would cause other public harms". The FCC application has now been withdrawn.
It appears that AT&T did not want to face the FCC while it dealt with the Justice Department. The FCC action clears the path for the Justice Department antitrust trial scheduled for February 2012. An unredacted version of the report will be provided to the Justice Department.
The action by the FCC does not end the merger. AT&T can revise its plans for Justice Department approval. AT&T could offer divestitures of portions of the combined companies as an answer to the objections. AT&T appears to be considering a settlement to gain merger approval.