AT&T, T-Mobile Deal Will Get Scrutiny in Washington

Congressional leaders and public interest watchdogs wasted no time cranking up the press machine over AT&T’s bid to acquire T-Mobile USA for $39 billion. The deal, which would combine the second- and fourth-largest wireless providers, needs the approval of the Department of Justice and the Federal Communications Commission.

“It will be the tech and telecom issue in D.C. this year,” said Bruce Gottlieb, general counsel of National Journal and former chief counsel and senior policy advisor to Julius Genachowski, chairman of the FCC, in a column in the National Journal.

Public interest groups were quick to warn regulators that the deal would lead to more consolidation of the wireless business, and leave only three major competitors in the space.

“The possibility that three players would control nearly three-quarters of that market will sure trigger intense scrutiny by the agencies,” said Andrew Schwartzman, senior vice president and policy director of Media Access Project. Free Press and Public Knowledge released similar sentiments.

A number of Democratic congressional leaders also weighed in. Sens. Jay Rockefeller, who chairs the Senate Commerce Committee, and Herb Kohl, chairman of the Senate Antitrust, Competition Policy and Consumer Rights Subcommittee, promised hearings.

While it’s a good bet that conditions will be put on the transaction, AT&T may have earned the good will of regulators when it helped to broker and subsequently supported the FCC’s controversial net neutrality rules.

On top of that, AT&T made a point of portraying the deal as good for advancing the Obama administration’s plan to speed wireless broadband access, because the deal would allow AT&T to expand its next generation network to an additional 46.5 million Americans, including rural communities.

“This helps achieve the FCC and President Obama’s goals to connect ‘every part of America to the digital age,'” the company said.

Still, the FCC might impose conditions similar to those it imposed on Friday on CenturyLink and Qwest Communications, a deal combining the No. 5 and No. 3 telecom companies. The FCC required the companies to expand their combined network and launch a broadband adoption program for low-income consumers.