* Genachowski seeks administrative hearing on AT&T merger
* Hearing would begin after antitrust trial concludes
* AT&T says the move is "disappointing"
By Jasmin Melvin
Nov 22 AT&T Inc was dealt a blow on
Tuesday as the top U.S. communications regulator sought to have
its planned $39 billion purchase of T-Mobile USA sent to an
administrative law judge for review.
Federal Communications Commission Chairman Julius
Genachowski sent a draft order to his fellow commissioners,
citing FCC staff findings that the deal would significantly
diminish competition and lead to massive job losses.
"The record clearly shows that -- in no uncertain terms --
this merger would result in a massive loss of U.S. jobs and
investment," a senior FCC official said.
The agency also concluded that the merger would not result
in significantly more buildout of next generation 4G wireless
service than would occur absent the transaction.
AT&T argues the deal will accelerate its expansion of
high-speed wireless service to nearly all Americans.
The U.S. Justice Department went to court in August to
oppose AT&T's purchase of T-Mobile from Deutsche Telekom AG on antitrust grounds. A trial in that case is due to
begin on Feb. 13.
Any administrative hearing at the FCC, which is charged
with evaluating the public interest merits of the deal, would
begin after the antitrust trial, an FCC official said.
AT&T called the FCC action "disappointing."
"It is yet another example of a government agency acting to
prevent billions in new investment and the creation of many
thousands of new jobs at a time when the U.S. economy
desperately needs both," Larry Solomon, a senior vice president
of corporate communications, said in an emailed statement.
He added that AT&T was reviewing all its options.
ADDING LENGTH TO REVIEW
Mizuho analyst Michael Nelson said the move adds another
hurdle to AT&T's prospects for closing the deal. "It's like the
FCC is piling on to the DOJ's blocking of the deal," he said.
Analysts at Stifel Nicolaus added that "such an extended
FCC review could put added pressure on T-Mobile to seek to exit
AT&T had hoped to close the deal by the first quarter of
Genachowski's order still requires approval by a majority
of commissioners but an administrative hearing seems likely
unless the antitrust case results in a permanent injunction
against the transaction, making the FCC hearing irrelevant.
Genachowski is expected to get the support of his two
fellow Democrats on the panel. The agency was left with only
one Republican after Meredith Attwell Baker's departure in
Acquiring T-Mobile would vault No. 2 ranked AT&T into the
leading position in the U.S. wireless market. The current
industry leader is Verizon Wireless, a venture of Verizon
Communications Inc and Vodafone Group Plc .
Sprint Nextel Corp , the No. 3 U.S. carrier, and a
regional competitor, C Spire, have also filed a lawsuit to stop
AT&T's purchase of T-Mobile, the No. 4 U.S. operator.
The 2002 proposed merger of EchoStar and DirecTV was the last time the FCC sought an administrative
hearing on a merger deal. In that case, the companies
ultimately scrapped their deal.
Genachowski circulated a separate order on Tuesday to allow
with conditions AT&T's proposed $1.9 billion purchase of
spectrum from Qualcomm Inc , an FCC official said. The
agency had no comment on any details of those conditions.
Qualcomm offered its unused spectrum after its FLO TV
business, a mobile television service, failed to take off.