AT&T’s T-Mobile and Qualcomm deals get extra FCC attention [Updated]

Aug 9, 2011
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AT&T's bid to buy Qualcomm's 700MHz spectrum will come under renewed attention, with the news that the Federal Communications Commission (FCC) now intends to review both it and the carrier's intended acquisition of T-Mobile together. According to the FCC, "the best way to determine whether either or both of the proposed transactions serve the public interest is to consider them in a coordinated manner at this time" since it has "questions regarding AT&T's aggregation of spectrum throughout the nation, particularly in overlapping areas."

The Qualcomm deal was announced back in December 2010, and was midway through its "informal 180-day clock" review process. That will now be stopped, however, as the FCC turns its attention to the combined deals and decides whether, in aggregate, they are not in the public interest. Qualcomm had been using the 700MHz spectrum for its little-loved FLO TV service, but AT&T intends to repurpose it for 4G.

More recently, AT&T announced plans to acquire fellow GSM carrier T-Mobile in a deal expected to cost the carrier $39bn and make it the biggest operator in the US. It's this that appears to have caught the particular attention of regulators, with caution expressed over whether it would give AT&T too much control over the market.

The FCC says that, just because it is looking at both deals together, that doesn't mean they can't be considered in isolation later; even if it decides one element cannot go ahead, that doesn't necessarily prevent the other. There's no news on when, exactly, it will review the deals.

Update: Qualcomm has given us the following statement:

The FCC should approve the pending AT&T-Qualcomm spectrum sale now because of the clear benefits to the public from the sale that stand on their own and are totally unrelated to the proposed AT&T-T-Mobile merger. Approval now will foster the public policies that the FCC correctly deems so vital for the American public. Approval now will re-purpose unused 700 MHz unpaired spectrum for mobile broadband, thereby easing America's spectrum crunch and helping to meet the FCC's goal of reallocating 300 MHz for mobile broadband over the next five years. Approval now will also allow Qualcomm to invest in a new, spectrally efficient technology (supplemental downlink) and enable the first worldwide deployment to occur in the U.S., thereby fostering U.S. economic growth and job creation and enhancing U.S. global leadership in wireless technology" Dean Brenner, VP of Government Affairs, Qualcomm.

COMMO* FEDERAL COMMUNICATIONS COMMISSION
Washington DC 20554
August 8, 2011
Via First Class Mail and E-mail
Michael P. Goggin
AT&T Mobility Spectrum LLC
1120 20th Street, N.W., Suite 1000
Washington, D.C. 20036
Dean Brenner
QUALCOMM Incorporated
1730 Pennsylvania Ave., N.W.
Washington, D.C. 20006
Re: Applications of AT&T Mobility Spectrum LLC and QUALCOMM Incorporated for Consent
To Assign Lower 700 MHz Band Licenses (WT Docket No. 11-18)
Dear Messrs. Goggin and Brenner:
We currently have pending before us the application of AT&T Mobility Spectrum LLC
("AT&T") and QUALCOMM Incorporated ("Qualcornm," and together with AT&T, the "Applicants") to assign licenses from Qualcomm to AT&T,' which has today reached 1 80 days on the Commission's informal timeline for consideration of merger applications.2 As you are aware, the Commission has been evaluating for some time3 the relationship between this proposed transaction and AT&T's proposed acquisition of T-Mobile USA ("T-Mobile").4 The Commission's ongoing review has confirmed that the proposed transactions raise a number of related issues, including, but not limited to, questions regarding AT&T's aggregation of spectrum throughout the nation, particularly in overlapping areas. As a result, we have concluded that the best way to determine whether either or both of the proposed transactions serve the public interest is to consider them in a coordinated manner at this time, without prejudice to independent treatment at a later date.5
See AT&T Mobility Spectrum LLC and QUALCOMM Incorporated Seek FCC Consent to the Assignment of Lower 700 MHz Band Licenses, WT Docket No. 11-18, Public Notice, DA 11-252 (rd. Feb. 9, 2011) ("CommentPublic Notice").
2See Informal Timeline for Consideration of Applications for Transfers or Assignments of Licenses or Authorizations Relating to Complex Mergers, gj2plicat!ons-transters-or-qinmenis-1icenses_or_aut/io (last visited Aug. 8, 2011).
See, e.g., Letter to Michael P. Goggin, AT&T Mobility Spectrum LLc, WT Dkt. No. 11-18 (dated May 20, 201 1);
Letter to Dean Brenner, QUALCOIVIM Incorporated, WT Dkt. No. 11-18 (dated May 20, 2011).

Applications of AT&T Inc. and Deutsche Telekom AG for consent to assign or transfer control of licenses and authorizations, WT Docket No. 11-65.
Thus, the Commission is not at this time taking the further step of formally consolidating the two transactions. See Joint Motion To Consolidate filed by Cincinnati Bell Wireless, LLC, Metro PCS Communications, Inc., NTELOS,
the Rural Cellular Association, the Rural Telecommunications Group, and Sprint Nextel Corporation, WT Dkt. No. 11-65, eta!. (filed Apr. 27, 2011).
Reflecting the interdependence of our ongoing review of the proposed transactions, we are stopping the Commission's informal 180-day clock for the above-referenced proposed transaction effective today.
Please do not hesitate to contact me or Renata Hesse, our Senior Counsel to the Chairman for Transactions, should you have any questions concerning the foregoing.
Sincerely,
Rick Kaplan
Chief, Wireless Telecommunications Bureau
cc: Peter J. Schildkraut, Arnold & Porter LLP
Paul Margie, Wiltshire & Grannis LLP

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