Heartland Institute Reacts to AT&T Withdrawing Merger Application for T-Mobile

November 28, 2011

On Thanksgiving morning, AT&T announced it was withdrawing its application with the Federal Communications Commission to merge with T-Mobile and will concentrate its efforts to complete the $39 billion deal with the antitrust division of the U.S. Department of Justice.

The move came at about the same time FCC Chairman Julius Genachowski referred the merger to an administrative law judge. AT&T also announced it was writing down $4 billion so it could pay T-Mobile’s parent company, Deutsche Telekom, what it promised if government regulators rejected the merger.

The following statements from telecommunications and legal experts at The Heartland Institute – a free-market think tank – may be used for attribution. For more comments, refer to the contact information below. To book a Heartland guest on your program, please contact Tammy Nash at tnash@heartland.org and 312/377-4000. After regular business hours, contact Jim Lakely at jlakely@heartland.org and 312/731-9364.


“This is the second time FCC Chairman Julius Genachowski has used holidays as a cover for mischief-making, knowing full well the press would virtually ignore it. Last Christmas, Genachowski ramrodded through the FCC’s network neutrality rules. For Thanksgiving this year, he announced the FCC would seek hearings conducted by an administrative law judge to determine whether the acquisition of T-Mobile by AT&T best serves the public interest – a move prompting AT&T to withdraw its FCC application in order to focus on another challenge from the Department of Justice.

“The moves by regulatory agencies reveal once again the disingenuous nature of an administration so quick to promote itself as promoting job growth while brooming burdensome regulations.”

Bruce Edward Walker
Managing Editor, InfoTech & Telecom News
The Heartland Institute
bwalker@heartland.org
312/377-4000


“The FCC told AT&T – unofficially, of course, using the public airways – that its merger with T-Mobile would not be in the public interest. Why not? The FCC said the merger ‘would diminish competition,’ increase joblessness, and result in ‘unprecedented concentration in the wireless industry.’ This is the perfect example of a government agency going rogue.

“The FCC’s mission is to ensure users of public airways serve ‘the public interest, convenience and necessity.’ This is not – or should not be – a license for the FCC to determine the financial and consumer impacts of a particular merger. That job belongs to the U.S. Department of Justice.

“DOJ is now suing to block the AT&T/T-Mobile merger on grounds consumers would be harmed by it. Enough is enough. What the FCC should be looking at is the impact of the merger on wireless coverage gaps, which is a problem more widespread than wireless companies would like to admit.”

Maureen Martin
Senior Fellow for Legal Affairs
The Heartland Institute
mmartin@heartland.org
312/ 377-4000


“This is a microcosm of what is wrong with the modern federal regulatory state. This merger is rightly, and solely, an antitrust question for the Department of Justice. And even then, Justice should block only if there is clear and compelling evidence – not merely guesses and assumptions – that the merger will do harm to consumers, not AT&T’s competitors in the industry.

“Yet the FCC, once again, decided to butt in and do what it does best: create regulatory uncertainty. Making matters worse, Genachowski tipped his hand by stating publicly that he opposes the merger. This left AT&T little choice but to withdraw its application, take its chances with the antitrust division of Justice, and put aside a staggering $4 billion as a hedge against government rejection.

“If someone can tell me how this waste of creative energy and resources fosters competition and best serves consumers, I’m all ears.”

Jim Lakely
Co-Director, Center on the Digital Economy
The Heartland Institute
jlakely@heartland.org
312/377-4000


The Heartland Institute is a 27-year-old national nonprofit organization with offices in Chicago, Illinois; Washington, DC; Austin, Texas; Tallahassee, Florida; and Columbus, Ohio. Its mission is to discover, develop, and promote free-market solutions to social and economic problems. For more information, visit our Web site or call 312/377-4000.