FCC combining AT&T's acquisitions into one big, controversial review

AT&T’s critics have gotten their wish. The FCC has agreed to combine its reviews of the operator’s proposed $39 billion acquisition of T-Mobile with its proposed $1.9 billion acquisition of Qualcomm’s former Flo TV 700 MHz licenses, giving public interest groups and many operators the coordinated examination they wanted of AT&T’s huge growth ambitions (Unfiltered: Operators want FCC to take on all AT&T’s acquisitions at once).

The FCC will still rule on each acquisition separately, but it due to the number of “related issues” raised by both acquisitions, the FCC has decided to put off its pending decision over the Qualcomm deal and coordinate its review of both deals simultaneously. In a letter to AT&T and Qualcomm, FCC Wireless Telecommunication Bureau Chief Rick Kaplan explained the FCC’s reasoning:

“The Commission's ongoing review has confirmed that the proposed transactions raise a number of related issues, including, but not limited to, questions regarding AT&T's aggregation of spectrum throughout the nation, particularly in overlapping areas. As a result, we have concluded that the best way to determine whether either or both of the proposed transactions serve the public interest is to consider them in a coordinated manner at this time, without prejudice to independent treatment at a later date.”

The news is a big blow to Qualcomm, which has been trying to sell off its 700 MHz spectrum ever since it decided to shut down Flo TV in December (CP: AT&T buys Flo TV spectrum for more 4G downlink). On Monday, the 180 days the FCC usually takes to consider an acquisition came to an end, but rather than make a decision or opt to hold hearings, the FCC simply stopped the clock, postponing any decision while the AT&T-T-Mobile merger is under review.

For AT&T, the coordinated review is a mixed bag. The FCC would have weighed Qualcomm’s 700 MHz spectrum in the T-Mobile decision regardless of whether AT&T had already taken possession of it or was still in the process of acquiring it. But by combining the two reviews, there’s a risk that AT&T may not get either of its prizes. The T-Mobile deal is by far the more controversial. Now the full weight of political and public pressure accompanying the T-Mobile acquisition will be applied to the Qualcomm deal as well. What should have been a breezy spectrum acquisition for AT&T now becomes all the more difficult.

Furthermore AT&T’s plans for Qualcomm’s spectrum are far more future-looking than its plans for T-Mobile. With T-Mobile, AT&T gets live GSM and high-speed packet access plus (HSPA+) networks already full of customers and it could immediately start the process of transitioning T-Mobile’s Advanced Wireless Service (AWS) spectrum from HSPA+ to LTE (CP: The New AT&T: It’s all about the spectrum).

Qualcomm’s 700 MHz spectrum, however, is unpaired so it can’t support the frequency division duplexing configurations of AT&T’s network. AT&T plans to use those frequencies solely for downlink capacity, creating an asynchronous LTE network with for more bandwidth devoted to downloads and capacity-intensive streaming applications. That kind of non-contiguous asynchronous carrier aggregation won’t be available until LTE-Advanced emerges, though, so Qualcomm’s 700 MHz spectrum won’t factor into AT&T’s network plans for several years.