FCC gets the ball rolling on AT&T-T-Mobile review

The AT&T-T-Mobile reality show has officially begun. The FCC kicked off proceedings today, filing its first public notice (FCC: WT Docket No. 11-65) pertaining to AT&T’s (NYSE:T) proposed $39 billion acquisition of T-Mobile USA from Deutsche Telekom (NYSE:DT).

AT&T hasn’t even filed its application with the FCC yet, so the FCC is really only making a notation in its ledgers, but once AT&T’s completed application is on file (AT&T is targeting April 21), the 180 day public commentary clock will start after which the FCC will almost certainly hold public hearings. Couple with the simultaneous review at the Justice Department, the process could take well over a year. It appears to be a scenario AT&T is prepared for. When it first pitched the acquisition to the public in March, AT&T said it anticipated at least a year for the deal to close, though it rather confidently predicted it would pass regulatory muster (CP: AT&T: T-Mobile deal would produce a bigger better operator ultimately benefiting consumers)

But in a conference call with the media today, the FCC laid down a few ground rules, saying it would conduct a thorough review of how the creation of the mega-carrier would impact the competitive landscape. The FCC said it would take into account how the deal would affect consumer choice in individual markets, how it would affect revenues of other operators, and how it would affect pricing for voice and data services.

As for spectrum, the FCC said it would conduct a market-by-market analysis of the combined operator’s holdings, which ultimately could favor AT&T. If AT&T were forced to divest itself of a large nationwide chunk of spectrum, one of the principle justifications for the deal would become moot. AT&T is eyeballing the 132 MHz-plus of spectrum it would hold nationwide as the platform for not just a large-scale long-term evolution launch, but also for its mobile broadband needs well into the future (CP: The new AT&T: It’s about the spectrum). But a market-by-market analysis could force it to only divest licenses on a piecemeal basis, and might even preserve spectrum assets in key larger markets, which tend to be served by more operators and thus support more competition.

The FCC provided no timeline for the review process, but it will be doing its work in conjunction with the Justice Department, which will weigh how the deal stacks up against federal anti-trust laws. The FCC, however, has far more leeway to impose restrictions on the deal if it chooses.