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AT&T blasts FCC report on T-Mobile purchase as one-sided [Updated]

December 1, 2011 |  9:16 am

AT&T CEO Randall Stephenson
AT&T Inc. blasted the Federal Communications Commission on Thursday for a report criticizing the company's proposed $39-billion purchase of T-Mobile USA Inc., saying the agency's findings were one-sided.

In a lengthy, detailed rebuttal on the company's public policy blog, a top AT&T executive accused the FCC staff — and by implication, agency Chairman Julius Genachowski — of being predisposed to reject the deal and publicly releasing the report this week to advocate for such an outcome.

The fiery post indicates AT&T is not going to give up on acquiring T-Mobile without a fight. If the deal fails to gain regulatory approval — a long shot at this point — AT&T would owe T-Mobile a break-up package worth $4 billion.

"The report cherry-picks facts to support its views, and ignores facts that don’t," wrote Jim Cicconi, AT&T's senior executive vice president of external and legislative affairs. "Where facts were lacking, the report speculates, with no basis, and then treats its own speculations as if they were fact."

"This is clearly not the fair and objective analysis to which any party is entitled, and which we have every right to expect," he said.

AT&T's is still running advertisements in Washington touting the benefits of its purchase of T-Mobile even as the deal has slammed into major regulatory roadblocks. In August, the Justice Department filed an antitrust lawsuit to stop the deal. And last week, Genachowski signaled his opposition by moving to seek a hearing and review by an administrative law judge.

AT&T and T-Mobile's parent company, Deutsche Telekom of Germany, said last week they would request permission to withdraw their application for FCC approval so they could focus on the Justice Department suit, is set to go to trial in February. 

The FCC granted the withdrawal request on Tuesday. But at the same time, the agency took the unusual step of releasing a 157-page staff re    port that says the deal would not be in the public interest. One opponent of the transaction called the report an "evisceration" of the companies' arguments for regulatory approval.

The staff concluded that the combination of AT&T, the nation's second-largest wireless carrier, with No. 4 T-Mobile, would harm competition, leading to higher prices. The report also says the deal would do little to expand high-speed Internet access and create jobs — challenging two key arguments the companies have made for regulatory approval.

The FCC report says AT&T's models for making those claims are flawed and contradicted by the company's internal documents, most of which were redacted from the public version of the report. For example, the report says the deal would lead to job losses as the companies combine duplicative operations, instead of directly or indirectly creating 55,000 to 96,000 jobs, as AT&T contended.

FCC officials said they would provide the Justice Department with an unredacted version of the findings.

Cicconi on Thursday said the FCC's analysis "wilfully ignores critical facts," makes conclusions "based purely on speculation" and "distorts the evidence presented."

As an example, he said the report dismisses job creation that would be spurred by AT&T's plans to spend billions of dollars over the next six years to expand its fourth-generation wireless network — even as  the agency has argued that its own more limited efforts to expand broadband Internet access would create 500,000 jobs.

"This notion — that government spending on broadband deployment creates jobs and economic growth, but private investment does not — makes no sense," Cicconi said. "Conversely, if the FCC had applied to its own broadband fund the same analysis it used for our merger-related investments, the result would be similar — zero new broadband, zero jobs, zero growth."

Asked a similar question during a news conference Wednesday, Genachowski said that there was a difference between the claimed efficiencies of a telecommunications merger and the "modernization of programs to get broadband to millions of people who don’t have it."

Genachowski said the FCC did not release the report to further harm the deal's chances of regulatory approval but acknowledged it could have an impact on the antitrust trial. He said the report was “developed for public release on an important matter that remains highly relevant to the parties' outstanding attempt to purse the transaction.”

[Updated at 10:12 a.m.: The FCC responded to AT&T's criticism by saying, "The AT&T/T-Mobile merger would result in the single greatest increase in wireless industry consolidation ever proposed. The FCC’s expert staff dispassionately analyzed all of the facts, including the arguments AT&T rehashes today."  An agency spokesman said the analysis mirrored findings by the Justice Department and several state attorneys general that "the transaction would decrease competition, innovation and investment, and harm consumers. In addition, AT&T’s own filings, many of which they have kept confidential, show that the deal would lead to massive job losses."]

RELATED:

AT&T withdraws T-Mobile merger plan from FCC

FCC report criticizes AT&T bid to take over T-Mobile

Justice Department sues to block AT&T takeover of T-Mobile

— Jim Puzzanghera in Washington

Photo: AT&T CEO Randall Stephenson, left, and T-Mobile USA CEO Philipp Humm are sworn in before testifying about their proposed deal before the Senate's antitrust subcommittee in May. Credit: Getty Images

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