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AT&T, Verizon criticize FCC for satellite firm deal

* AT&T says FCC action potentially unlawful

* Verizon calls transaction troubling

* FCC says deal to ignite competition

WASHINGTON, March 29 (Reuters) - AT&T Inc T.N and Verizon Communications Inc VZ.N criticized the U.S. Federal Communications Commission on Monday for blocking their ability to lease airwaves from a mobile satellite services company.

The complaints came after Harbinger Capital Partners received FCC approval late Friday to acquire SkyTerra Communications Inc SKYT.OB, which plans to build a nationwide broadband network.

The transaction could help bolster recommendations in the FCC’s National Broadband Plan aimed at spurring innovation and competition, and increasing broadband services to more Americans.

Harbinger said SkyTerra, which is based in Reston, Virginia, plans to build a land-based network aimed at reaching 260 million Americans by the end of 2015.

As part of the regulatory approval, Harbinger agreed to seek FCC approval before leasing wholesale spectrum capacity to the top two wireless providers: AT&T and Verizon Wireless, which is a venture between Verizon Communications and Vodafone Group Plc VOD.L.

Jim Cicconi, an AT&T senior executive vice president, chastised the FCC for creating a “very disturbing precedent” blocking his company from being able to negotiate wholesale contracts. He said that essentially allows the agency to pick “winners and losers” in the wireless market.

“This action is manifestly unwise and potentially unlawful,” Cicconi said.

Verizon spokesman David Fish said the company is reviewing options in response to the SkyTerra transaction. The FCC’s “process and the resulting restrictions are troubling,” he said.

Paul de Sa, head of the FCC’s Office of Strategic Planning and Policy Analysis, defended the FCC’s action, noting that Harbinger volunteered those commitments to build a broadband network and receive FCC approval before selling capacity to AT&T and Verizon Wireless.

“These commitments (by Harbinger) do not prohibit any specific transactions,” de Sa said. “But they do provide some reassurance that the approval will ignite new broadband competition while protecting the public from any potential harms.”

A spokesman for Harbinger could not immediately be reached for comment, but the firm said in a document filed with the FCC that SkyTerra’s network will enhance competition in the mobile broadband industry.

“Harbinger is committed to the success of the retail customers, enabling competitive carriers and new entrants to enjoy a level, playing field in network performance and economics,” Harbinger said in the FCC filing.

Reporting by John Poirier; Additional reporting by Svea Herbst-Bayliss in Boston; Editing by Richard Chang