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FCC Designates AT&T–T-Mobile for Hearing

The FCC has proposed designating the AT&T–T-Mobile merger proposal for an administrative hearing to collect info and input on whether the deal should be approved, and FCC staffers gave strong indications they have major issues with the deal.

The chairman has circulated an order designating the deal for hearing, which the commission does if it is not going to approve a deal or has major issues with it. According to sources, FCC staffers have signaled they do not think the deal is in the public interest. It was characterized as unprecedented concentration.

"The record clearly shows that -- in no uncertain terms -- this merger would result in a massive loss of US jobs and investment," said an FCC official in an e-mailed statement Tuesday.

AT&T shot back: "The FCC itself recently claimed that their $4.5 billion Broadband USF will create 500,000 jobs over the next 6 years. Yet somehow in our merger, the FCC staff concluded that a far greater investment in broadband -- $8 billion -- plus firm commitments on job preservation and enhancement, will instead result in ‘massive loss of US jobs and investment.' This notion, that when government spends money on broadband it creates jobs, but when a private company spends money it doesn't, is clearly wrong on its face, and raises questions about the credibility of anyone at the FCC who would make such a claim."

The commission also is circulating an order approving AT&T–Qualcomm deal. AT&T is buying former broadcast spectrum that Qualcomm used to try unsuccessfully to create a new, nationwide pay video service. AT&T argues it will put it to a "higher, better use," advanced 4G wireless service. That is the same argument it is making for the public interest benefits of the T-Mobile purchase.

The Justice Department has already sued to block the T-Mobile deal, citing competitive concerns.

The order requests that the FCC's administrative law judge not hold the hearing until after the DOJ trial is concluded, which is scheduled for February.

"The FCC's action today is disappointing," said Larry Solomon, senior VP of corporate communications, at AT&T. "It is yet another example of a government agency acting to prevent billions in new investment and the creation of many thousands of new jobs at a time when the US economy desperately needs both. "At this time, we are reviewing all options."

Free Press, which opposes the proposed $39 billion merger, praised the move as the start of the commission's process to reject the deal.

"We applaud the FCC chairman for standing up for the public interest and saving American jobs, despite intense pressure from AT&T's army of lobbyists," said Free Press President Craig Aaron.

"Even though this was something that we have expected all along, it is very promising that the FCC will be taking a hard look at the AT&T-T-Mobile transaction," said Andrew Schwartzman of Media Access Project. "A decision to designate a hearing constitutes a finding by the FCC that there are "substantial and material" questions as to whether the deal is in the public interest."