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.
2. Will Verizon buy Sprint (the other major wireless carrier)?
There are plenty of reasons why not: incompatible technologies, Verizon's expensive focus on building fiber to the home throughout its geographic footprint.
But letting this move go unanswered is also a pretty scary place to be, especially for a company that (until today) had been the comfortable numero uno in the wireless market. Expect some serious soul-searching in the Basking Ridge C-suite over the next few weeks.
Historical note: When Southwestern Bell announced its decision to buy AT&T (then a long-distance company) in January 2005, Verizon announced its decision to buy MCI (the other major long distance company) just 2 weeks later.
3. Will Silicon Valley take a side?
Five years ago, it looked like the high-tech and consumer electronics industry was (unhappily) much less powerful than the wireless carriers. Smaller tech companies, and even heavy weights like Microsoft and Google, complained that the carriers were stifling innovation in an effort to control the market for downloadable music, games, mapping programs, and so forth.
But with the rise of the iPhone, Android, and the ubiquitous app, Apple, Google, and (to a lesser extent) Microsoft are now major business partners of the carriers. And the first rule of regulatory gamesmanship in Washington is that you don't -- at least without a very good reason -- fight with your business partners in the regulatory arena.