An Ex-Regulator's Take on AT&T Buying T-Mobile

Tear up your telecom policy scorecard for 2011, thanks to AT&T's decision to purchase T-Mobile for $39 billion.

The transaction will have to be reviewed by both the Federal Communications Commission and the Department of Justice -- with Congress, via its oversight authority, looking over everyone's shoulder as well.

And it will be the tech and telecom issue in DC this year.

The DOJ will apply standard antitrust law. It is no secret that the wireless marketplace is becoming more concentrated -- with AT&T and Verizon zooming away from their competitors in recent years. So it is no surprise that leading antitrust experts (like Herbert Hovenkamp) are already saying this will be a squeaker.

And then there is the FCC. The agency was created in order to manage the nation's spectrum resources. Its legal and practical authority over spectrum licenses is greater than with any other issue it addresses.

During the Clinton years, the agency imposed limits on how much spectrum any one company could hold. But those were eliminated by the Bush Administration -- and the issue has remained a partisan sore spot ever since.

(Full disclosure: Until last summer, I was chief counsel and senior policy advisor to the current chairman of the FCC, Julius Genachowski and before that, I was an advisor to Commissioner Michael J. Copps.)

Democrats have typically argued that no one company should control more than one-third of existing mobile spectrum--to ensure the existence of at least 3 competitors.

Republicans maintain that spectrum ought to be allocated through open markets -- if a company has succeeded in attracting customers and cash flow, it deserves access to the spectrum necessary to serve them.

The stakes couldn't be higher because (1) wireless is the growth engine of all of tech and telecom right now and (2) wireless carriers are rolling out next generation 4G technologies, which will offer speeds several times faster than what are available today.

Key Questions About the AT&T Acquisition

Here are some questions to keep in mind over the next few months:

1. How will Democrats play the issue?

The conventional wisdom is that they will lay down on the tracks. Already public interest groups are calling the merger "unthinkable." But AT&T managed to (more or less) reassemble itself in the two-plus decades since its breakup--over the objections of public interest groups every step of the way.

Just as important, in the run-up to the 2012 elections, the White House (which has substantial authority over the DOJ) and the FCC (which is technically independent, but often takes its cues from the White House) will have no interest in being labeled anti-business or anti-jobs.

Note that T-Mobile is German-owned--which was another sore spot, on both sides of the aisle, when it bought these assets in the first place. Expect AT&T to make major public commitments to increasing the number of American jobs through this transaction.

Presented by

Bruce Gottlieb is general counsel for The Atlantic. He was formerly chief counsel with the Federal Communications Commission and a staff writer at Slate, where he originated the Explainer column.

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