The FCC is catching heat from House Democrats over its staff report on why it thought the AT&T–T-Mobile deal reduced competition and was not in the public interest.
At issue is a "spectrum screen" they used to determine local market concentration in the wireless phone business. The FCC apparently changed that screen to a finer mesh, as it were, when applying it to the deal, which House Republicans argue gets to their concerns about the openness and transparency of FCC processes.
In a letter to FCC Chairman Julius Genachowski, House Energy & Commerce Committee Chairman Fred Upton (R-Mich.) and Communications Subcommittee Chairman Greg Walden (R-Ore.), asked for info on how the FCC uses the screen in mergers.
The FCC formerly used a set cap to determine whether a merger would concentrate too much spectrum in one geographic area, the legislators pointed out in their letter. That cap was changed in 2003 to a spectrum screen that triggered a more "granular" review. But because that was not adopted in a formal rule, they argue it is uncertain how and why the FCC uses it.
Since the commission apparently changed that screen to reduce the amount of spectrum holding that raises red flags, also without adopting formal rules, and appeared to be treating it less like screen and more like a de facto lack of competition, they had lots of questions they needed answered.
The letter echoed AT&T's sentiments in a meeting with a top commission staffer this week, according to a copy of the ex parte filing. "Given the central role the spectrum screen plays in the Commission's competitive analysis of transactions filed before it," the filing says, "AT&T argued that the Commission should make adjustments to its screen in an open rulemaking, conducted and concluded annually, allowing party participants to file comments, and subjecting the Commission's decisions on the screen to judicial review."
While they were at it, Upton and Walden asked for answers on how it decides to release staff analyses on mergers that have been withdrawn.
AT&T complained that the commission should not have released the report after the company withdrew its application. Top FCC staffers countered that since AT&T signaled it might reapply, the draft could give it guidance on what might better pass muster, adding that a lot of work had gone into it and it was being released in the interests of transparency.
"We remain focused on keeping the wireless marketplace competitive in order to fuel investment, innovation and job creation," said FCC Wireless Bureau Chief Rick Kaplan. "Our process was participatory, thorough and data-driven. In short, it was by-the-books and performed by expert professional staff who conducted a dispassionate analysis of the proposed transactions. The proposed minuscule change in the FCC's spectrum screen absolutely had no practical effect in the staff's review of either AT&T's proposed takeover of T-Mobile or its acquisition of spectrum from Qualcomm."
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