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July 15, 2011

FCC On $39 Billion T-Mobile and ATT Deal

Is there enough competition among the wireless service companies in the U.S.? The Federal Communications Commission's annual report on the matter, released yesterday, didn't definitively answer that question. And its neutral stance is causing many to wonder how the regulatory agency will rule on the pending merger of AT&T and T-Mobile.

In its 304-page "15th Annual Mobile Wireless Competition Report," the FCC acknowledge that the U.S. market for wireless service has become more concentrated, for the second consecutive year. But it stopped short of making a "formal finding" as to whether there is effective competition in the industry.

Meanwhile Sprint Nextel Corp. (S) was subpoenaed by nine states investigating the proposed $39 billion merger between AT&T Inc. (T) and T-Mobile, indicating potential uneasiness with the consolidation of the mobile market.

In a June 28 letter to the Federal Communications Commission, Sprint said attorneys general in the states of Arizona, Florida, Hawaii, Illinois, Minnesota, New York, Pennsylvania, Texas and Washington had requested the carrier to deliver copies of "full, unredacted copies of all materials that it has submitted to the Commission regarding the proposed transaction, including its Petition to Deny." The letter said the U.S Justice Department's anti-trust division had also requested the same material.

News of the subpoenas comes after Sprint's request in late May that the FCC block the merger of AT&T and Deutsche Tekelom AG's (DTE) T-Mobile USA unit. The merger, which was agreed to in March, would combine the country's second- and fourth-largest wireless carriers. Sprint is the third largest.