AT&T’s attempt to acquire competing wireless carrier T-Mobile may hit another roadblock. FCC Chairman Julius Genachowski is seeking to refer the issue to an administrative law judge for review. If FCC commissioners approve the plan, the hearing will require AT&T to show that the transaction is “in the public interest.”

The New York Times reported that Genachowski made the move Tuesday, Nov. 22, after FCC staff concluded that the deal would have a negative effect on consumers and job opportunities. The merger is also the subject of an antitrust lawsuit filed by the U.S. Department of Justice in August, which is scheduled for trial in February 2012.

“The record clearly shows that — in no uncertain terms — this merger would result in a massive loss of U.S. jobs and investment,” a senior FCC official told Government Technology in an email.

FCC approval is needed for the $39 billion merger because the transaction requires the companies to transfer licenses in order to use public airwaves for wireless signals and Internet access. If the matter goes before an administrative law judge, that ruling will then be considered by the FCC for a final decision.

An FCC spokesman believed that the agency’s commissioners would vote on Genachowski’s plan prior to the FCC’s Nov. 30 meeting.

Not surprisingly, AT&T was frustrated at the possibility of its merger going to a hearing.

“It is yet another example of a government agency acting to prevent billions in new investment and the creation of many thousands of new jobs at a time when the U.S. economy desperately needs both,” said Larry Solomon, AT&T senior vice president of corporate communications, in a statement.

John Bergmayer, a senior staff attorney with Public Knowledge, an Internet and telecommunications advocacy organization, said the hearing could be a tough hurdle for AT&T to overcome.

“This is a significant setback for AT&T — most mergers that reach this stage end up failing,” Bergmayer wrote in a blog post. “This isn't the last step at the FCC, because the full commission still needs to vote on the order, and then AT&T can either press its case before an administrative law judge or simply withdraw its application. But it's an important step and a victory for the public interest.”

Will Merger Impact Local Governments?

If the merger goes through, experts are mixed on whether there will be an impact to state and local government wireless customers.

Gerard Lederer, of counsel with Best Best & Krieger, told Government Technology in March that any merger between AT&T and T-Mobile would raise at least three questions about the potential impact on local governments:

  • Will local government have fewer choices for wireless services?
  • Will the merger cause a reduction in the number of cell sites that companies lease from local governments for their antennae?
  • Will the merger lead to fewer cell site requests, or will it result in an increased number of co-location requests on an existing site?

In an email to Government Technology on Nov. 23, Lederer said the potential administrative judge hearing doesn’t change the questions that local governments would have over a potential merger, but agreed with those who felt the union of AT&T and T-Mobile may have taken a hit.

“A local government's decision matrix … has not changed, only the likelihood of the deal's ultimate success has taken a step back,” Lederer explained, referencing the impacts the merger may have on municipalities.

Roger Entner, industry analyst and founder of Recon Analytics, a telecommunications research and consulting firm, believed the merger would have no significant cost impact on local government entities.

Entner conceded, however, that at the outset, a merger between AT&T and T-Mobile might result in a short-term loss of cell sites. But over time, given the usage of mobile devices, more growth would be inevitable, he said.

“In the long run, we’ll need more cell sites rather than less,” Entner said in an interview with Government Technology earlier this year.

Brian Heaton  |  Senior Writer

Brian Heaton is a senior writer for Government Technology. He primarily covers technology legislation and IT policy issues. Brian started his journalism career in 1998, covering sports and fitness for two trade publications based in Long Island, N.Y. He's also a member of the Professional Bowlers Association, and competes in regional tournaments throughout Northern California and Nevada.