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Updated: AT&T Slams FCC Staff Report

Calling the report unbalanced and without credibility, AT&T fired back at the FCC Thursday over FCC Chairman Julius Genachowski's  release of a staff report detailing the reasons the FCC did not think the T-Mobile merger met the FCC's public interest standard, and why they still had "substantial and material questions of fact" with AT&T's case for the merger.

"We expected that the AT&T–T-Mobile transaction would receive careful, considered, and fair analysis," said AT&T Senior EVP Jim Cicconi on AT&T's public policy blog. "Unfortunately, the preliminary FCC Staff Analysis offers none of that.  The document is so obviously one-sided that any fair-minded person reading it is left with the clear impression that it is an advocacy piece, and not a considered analysis."

Cicconi said the FCC "cherry-picks facts to support its views, and ignores facts that don't." He said that includes assuming that rural build-outs would occur whether or not the deal was done, apparently based on the assumption that there is enough competition to spur billions in investment in those areas. "This is at odds with virtually every FCC and Administration statement of the past year when it comes to rural build-out, and in our view demonstrates how far the report's authors were willing to go in order to ignore every single benefit of our merger with T-Mobile," he said.

He also said it made no sense for the government to think that its $4.5 billion investment in broadband via the Universal Service Fund would create 500,000 jobs and $50 billion in investment, while AT&T's proposed investment would not spur new jobs or investment. "This notion -- that government spending on broadband deployment creates jobs and economic growth, but private investment does not -- makes no sense," he said. "Conversely, if the FCC had applied to its own broadband fund the same analysis it used for our merger-related investments, the result would be similar -- zero new broadband, zero jobs, zero growth."

He also said that the FCC was strangely silent on an issue that has driven its policies, including the push for broadcast spectrum. "The FCC has made a national issue of the spectrum crisis the U.S. faces, and has made addressing this shortage the basis of its requests for incentive auction authority," he said. "Yet the report barely mentions any spectrum issue, much less the spectrum crisis previously identified by the FCC, although that is the primary reason driving AT&T's need for this merger. The report seems to discount the significant spectrum constraints faced by AT&T, including an 8,000% increase in data traffic on our network over the past four years, even though we have submitted volumes of evidence documenting these constraints."

Genachowski defended the report's release Wednesday (Nov. 30), saying he did not release to reduce the deal's chances at the Justice Department, which is suing to block the mergers, but because it was always meant to be public and to release it was only fair to all parties. AT&T has argued the release of the draft report was improper., FCC staffers had pitched the report, in part, as a possible blueprint for AT&T to adjust the deal if, as it has pledged, it refiles it with the commission, but AT&T clearly was not looking at it that way.

"The AT&T/T-Mobile merger would result in the single greatest increase in wireless industry consolidation ever proposed," said an FCC spokesman Thursday. "The FCC's expert staff dispassionately analyzed all of the facts, including the arguments AT&T rehashes today. The professional staff's analysis was based on a 200,000-page record that included extensive participation from more than fifty corporations and consumer groups that filed petitions to deny the merger application. The objective analysis concluded, like that of the Department of Justice and multiple state attorneys general that the transaction would decrease competition, innovation and investment, and harm consumers. In addition, AT&T's own filings, many of which they have kept confidential, show that the deal would lead to massive job losses."