FCC May Regulate AT&T if Merger Gets Approval

The Federal Communications Commission may continue to monitor AT&T even after the carrier’s merger with T-Mobile, suggesting an approved purchase could come with certain conditions.

The FCC and Justice Department have signaled they will increase regulation in the telecommunications industry if they approve the merger. The announcement may mean the government may force AT&T and Verizon Wireless to keep their prices from rising to help prevent a duopoly, or even make AT&T sell some of its acquired spectrum to Sprint to keep the underdog company competitive.

The FCC’s wireless industry regulation appears to be a compromise AT&T may have to make if it wants the merger to go through, especially as reports surface suggesting the deal is bad for consumers.

The carrier has begun selling some of its assets that could give the company too much market power in anticipation of an approved deal, but it doesn’t seem to be enough to sway critics.

Research firm Yankee Group predicted earlier this month the deal would increase market concentration, decrease competition, and raise average mobile prices in U.S. wireless markets. The Yankee group called for a block of the merger or stronger regulation, saying consumers would have reduced choices and AT&T would have no incentive to offer competitive prices.

But AT&T, which would have nothing to gain from increased regulation, denies that claim.

“The wireless marketplace is intensely competitive today, and it will remain competitive after this merger,” said AT&T spokesman Michael Balmoris. “More regulation would be unwarranted, unwise and unproductive.”

However, wireless competitors like Sprint disagree, fearing they’ll be unable to offer the necessary prices to compete in a market with two wireless superpowers. If federal regulators allow AT&T to merge with T-Mobile, Sprint says the combined carrier, along with Verizon, would control 80 per cent of the wireless market.

This would not be the first time the FCC approved a merger in exchange for companies yielding to some sort of regulation. In 2005, the FCC’s approval of the merger between Verizon and MCI required the company to lease fibre-optic networks serving business customers to competitors in New York, Los Angeles and Chicago.

But because of the size of the AT&T/T-Mobile merger, analysts say the number of regulations and length of time the carrier would have to abide by them may be much larger than those involved in past mergers.

No matter what the final decision on the merger is there is certain to be winners and losers. But if the deal does go through, the FCC’s regulations will attempt to ensure no one comes out too far ahead.

This post originally appeared at Mobiledia.

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