AT&T Drops Bid To Buy T-Mobile

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Score one for the regulators. AT&T dropped their bid to buy or merge with T-Mobile. In a somewhat petulant press release, they announced it this way:

The actions by the Federal Communications Commission and the Department of Justice to block this transaction do not change the realities of the U.S. wireless industry. It is one of the most fiercely competitive industries in the world, with a mounting need for more spectrum that has not diminished and must be addressed immediately. The AT&T and T-Mobile USA combination would have offered an interim solution to this spectrum shortage. In the absence of such steps, customers will be harmed and needed investment will be stifled.

“AT&T will continue to be aggressive in leading the mobile Internet revolution,” said Randall Stephenson, AT&T chairman and CEO. “Over the past four years we have invested more in our networks than any other U.S. company. As a result, today we deliver best-in-class mobile broadband speeds – connecting smartphones, tablets and emerging devices at a record pace – and we are well under way with our nationwide 4G LTE deployment.

“To meet the needs of our customers, we will continue to invest,” Stephenson said. “However, adding capacity to meet these needs will require policymakers to do two things. First, in the near term, they should allow the free markets to work so that additional spectrum is available to meet the immediate needs of the U.S. wireless industry, including expeditiously approving our acquisition of unused Qualcomm spectrum currently pending before the FCC. Second, policymakers should enact legislation to meet our nation’s longer-term spectrum needs.

“The mobile Internet is a dynamic industry that can be a critical driver in restoring American economic growth and job creation, but only if companies are allowed to react quickly to customer needs and market forces,” Stephenson said.

I was curious about what legislation in particular AT&T wanted "to meet...longer-term spectrum needs." Behold, I discovered this tidbit from The Hill:

Federal Communications Commission (FCC) Chairman Julius Genachowski said on Tuesday evening that language in the House GOP payroll tax bill that restricts his agency's ability to regulate the airwaves could "threaten U.S. global leadership in spectrum-related innovation."

"Several provisions of the House bill would tie the agency’s hands in ways that could be counterproductive, reducing economic value and hindering innovation and investment," he said in a statement after the House approved the bill 234-193.

Ah, this would be the bill that the House is trying to force into a conference committee rather than taking the Senate's bill and voting on it. And there's more:

The spectrum legislation incentivizes television broadcasters to give up their airwaves for the government to auction to wireless companies, which have struggled to meet the data demands of smartphones and tablet computers. The bill also creates a nationwide broadband network for first responders.

Genachowski called House passage of a bill authorizing spectrum auctions "a major achievement" and applauded Republicans for including the public safety network.

"Unless we free up new spectrum for mobile broadband, the looming spectrum crunch risks throttling our mobile economy and frustrating mobile consumers," he said.

But he warned that provisions limiting the FCC's ability to designate some spectrum bands for unlicensed use could stifle economic growth.

"Unlicensed spectrum stimulates innovation, investment, and job creation in many ways, including by providing start-ups with quick access to a testbed for spectrum that is used by millions, bringing new technologies to consumers in a rapid fashion," he said. "Wi-Fi, Bluetooth, cordless phones, garage door openers, wireless car keys, and baby monitors—industries generating billions of dollars of revenue — would not exist without unlicensed spectrum."

The Republican spectrum bill does not do away with unlicensed spectrum, but it does restrict the FCC's ability to set aside additional spectrum for unlicensed use.

The good: The House bill authorizes an auction of more spectrum, something everyone agrees is necessary. The bad: The House bill wants to severely limit the FCC's ability to regulate how that spectrum is allocated. Given AT&T's pique with regulators who nixed this deal, are we at all surprised that they're attempting a back-door entry to monopolize even more of the broadband market?

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