AT&T, T-Mobile move toward spectrum transfer deal

The companies filed a request with the FCC to transfer T-Mobile's spectrum to AT&T, kicking off an FCC review of the merger

The U.S. Federal Communications Commission on Thursday received a request to transfer T-Mobile's licenses to AT&T, one of the first steps the companies are making in the potentially lengthy approval process of AT&T's proposed acquisition of the smaller operator.

AT&T and T-Mobile announced the $39 billion acquisition in March, saying the deal could take a year to complete. It faces reviews by the FCC and the Department of Justice. AT&T has said it may have to spin off some assets as a condition of approval.

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By requesting to transfer T-Mobile's licenses to AT&T, the companies kick off the FCC's review of the deal. The FCC will consider whether combining AT&T's and T-Mobile's wireless licenses will comply with the agency's regulations. The FCC will also consider how combining the licenses will affect competition.

In the filing, AT&T, the second-largest operator, and T-Mobile are portrayed as facing significant challenges without being able to combine. T-Mobile has "declining market shares and no clear path to LTE (Long Term Evolution), the gold standard for advanced mobile broadband services," the companies wrote.

"AT&T faces network spectrum and capacity constraints more severe than those of any other wireless provider, and this merger provides by far the surest, fastest, and most efficient solution to that challenge," they said.

They go on to assert that the agreement will benefit consumers by reducing the number of dropped calls, boosting data speeds and expanding the deployment of next-generation technologies.

Others don't agree. Sprint, which has been one of the most vocal opponents of the proposed acquisition, released another statement against the plan in response to the filing with the FCC. "It is an indisputable fact that this takeover would create an entrenched duopoly with control of approximately 80 percent of wireless industry revenues," said Vonya McCann, senior vice president of government affairs at Sprint. "This kind of leverage could strangle competition and give AT&T the power to increase prices, threaten innovation critical to this industry and eliminate American jobs."

Sprint believes that the FCC should reject the deal outright. "This proposed takeover cannot be fixed with conditions or divestitures," McCann said.

If the deal does go through, AT&T would dominate the mobile market, dwarfing Sprint. Sprint has been speaking out against the deal since it was first announced.

Nancy Gohring covers mobile phones and cloud computing for The IDG News Service. Follow Nancy on Twitter at @idgnancy. Nancy's email address is Nancy_Gohring@idg.com

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