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Will federal regulators rubber stamp AT&T's bid to acquire T-Mobile? The cash-and-stock deal valued at $39 billion will combine the second largest wireless carrier with the fourth, worrying consumer advocates about price gouging in an already heavily-consolidated telecom industry. AT&T contends that the U.S. wireless industry will remain "one of the most fiercely competitive markets in the world" while allowing the company to offer faster 4G coverage to a broader swath of the country. Approval of the deal awaits federal regulators at the FCC and Justice Department. AT&T says it's confident the deal will be approved in 12 months or less but not if consumer advocate groups have their way. Here's a look at the regulatory hurdles AT&T will have to overcome.

The Chicago Tribune's lead story this morning gives voice to the deal's detractors in DC. "Washington lawmakers quickly jumped on news of the deal, with Democratic senators urging close scrutiny of the acquisition by federal regulators," reports David Sarno and Alex Pham. "In looking at the proposal, federal antitrust and telecommunications regulators such as the Federal Communications Commission and the Justice Department are likely to weigh the benefits of market and technical efficiencies achieved by the merger against the potential loss of competition. Regulators are also likely to scrutinize the combined market share for both Internet broadband services and wireless telephone services."

They quote Democratic Sen. John D Rockefeller IV saying it's "absolutely essential" that regulators "leave no stone unturned in determining what the impact of this combination is on the American people."

Meanwhile, The Atlantic's Bruce Gottlieb, formerly the chief counsel of of the FCC, looks at how the issue will become politicized in the coming year:

The conventional wisdom is that [Democrats] 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.

The Wall Street Journal's Spencer Ante and Amy Schatz report that AT&T will likely have to make large divestitures to secure the deal.

In a research note, Credit Suisse analyst Jonathan Chaplin said the deal's regulatory risk is "enormous." "We have never seen a deal with more regulatory risk be attempted in the U.S.," he wrote in the note. "It is unlikely that AT&T would attempt a deal that they knew would fail; however, we can't see how they would get this through without massive divestitures and concessions."

[AT&T CEO Randall] Stephenson acknowledges divestitures are likely to be required. The company is prepared to divest itself of "substantial" parts of its wireless subscriber base in certain markets to appease regulators, a person familiar with the matter said.

And if it wasn't already clear, The Journal's Shira Ovide notes that "AT&T is no dummy."

"They know this deal will be a slug fest, and they’ve worked out exactly the talking points to attack Washington’s regulatory armor," she writes. "AT&T says there will remain plenty of competition left in the wireless business to keep companies honest and well meaning. And AT&T has touted the breakthroughs the combined company can make in fast wireless Internet service — a priority of the Obama White House."

In a presentation to investors, AT&T laid out why it thinks it will pass regulatory scrutiny. One argument is that wireless service has become cheaper over the years even with more mergers and acquisitions. To that Business Insider's Dan Frommer tweets "Uh, what HASN'T gotten cheaper in tech?":

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