AT&T Faces FCC Opposition

by Matt Klassen on November 24, 2011

Already reeling from the news that the Department of Justice is pursuing legal action to block its intended merger with T-Mobile, AT&T may have received the knock-down blow this weekas FCC Chairman Julius Genachowski officially weighed in on the controversy, stating that the merger is not in the public’s interest and should be voted down.

In fact, Chairman Genachowski is reportedly asking the other four voting member of the Commission to approve an administrative hearing wherein the onus would be on AT&T to prove decisively that the merger was in fact in public interest.

But with the chances of this merger actually being approved becoming smaller and smaller each day, the question remains, how long will AT&T keep fighting to keep its T-Mobile acquisition alive?

It would be an understatement to say that the proposed AT&T/T-Mobile merger has been unpopular. While its clear that AT&T was supremely confident in its chances of getting the deal approved, going so far as to agree to pay T-Mobile $3 billion if the deal fell through in addition to promising several billion in assets and spectrum, it wasn’t long before the voices of opposition starting the seemingly endless stream of lawsuits.

While it didn’t start with the lawsuit from the Department of Justice, one could say that it was the first sign that this deal had a significant uphill battle to win in order to get approval. In addition to the DOJ, however, lawsuits poured in from several states attorney generals and wireless rivals like Sprint and Cellular South, all refusing to buy into AT&T’s merger propaganda that the deal would create jobs, spur market growth, and advance wireless technology.

Now with Chairman Genachowski’s uncharacteristically bold position on the merger, it looks like perhaps now we’ve seen the final nail in the coffin for AT&T’s T-Mobile acquisition. But the question remains, how long will AT&T continue to fight with the opposition mounting against the deal? While many companies often abandon acquisition deals that face this much opposition, for AT&T the answer will likely be as long as it takes before every avenue has been exhausted and an official decision blocking the deal comes down.

Truth be told, AT&T has already invested billions in this merger, both through what it has promised T-Mobile regardless of the outcome and through its ongoing legal proceedings to try to push the deal through. With that much money invested, it will still be awhile before the option to cut and run looks more attractive than continuing to fight for a deal that would place AT&T at the top of the wireless market.

But we really won’t see any progress until February, when the DOJ’s case against AT&T goes to Federal court. Should AT&T win that case, it will likely have significant leverage to challenge the FCC’s decision and the other lawsuits waiting in the wings. Should it lose at any stage along this long legal road however, and I would guess that it would be the end for the AT&T/T-Mobile merger.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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