AT&T files with FCC to acquire T-Mobile

AT&T (NYSE:T) filed its formal paperwork with the FCC to acquire spectrum licenses from T-Mobile USA, a major milestone in its bid to acquire the nation's No. 4 carrier in a $39 billion deal. In the filing, which runs more than 100 pages, AT&T provides details on its decision to purchase T-Mobile. The deal was announced March 20.

In the filing, which essentially argues why AT&T believes the proposed acquisition is in the public interest, AT&T touts many of the benefits it has noted before, including that the deal will bring increased spectral efficiencies, fewer dropped calls and better service. AT&T also argues that the deal is the most efficient way for it to avoid exhausting its spectrum, despite all of the efforts it has taken and continues to take to improve its network, including deploying new cell sites, DAS systems and expanded backhaul. Additionally, AT&T argues that without the deal, T-Mobile would face spectrum exhaustion and has no clear path to deploy LTE.

Interestingly, AT&T updated its LTE coverage plans in the document. The carrier now claims the deal will bring LTE coverage to more than 97 percent of the U.S. population, covering an additional 55 million more Americans than AT&T's current LTE plans. In March, AT&T said the deal would bring LTE to 95 percent of Americans, or 46 million additional people.

In a press conference with reporters in Washington, D.C., Joan Marsh, AT&T's vice president of federal regulatory, said that the company identified additional, unspecified cell sites that could support the LTE buildout. She also said that regardless of whatever divestitures AT&T might have to make as a condition of the deal, the company is confident it will hit the 97 percent coverage target.

The FCC will review whether the deal complies with all applicable laws and rules, and whether the companies can prove that the deal serves the public interest, convenience and necessity. Specifically, the FCC will have to consider how the deal will impact competition; the agency will analyze specific markets based on a so-called HHI screen--a standard measurement for market concentration--as well as a spectrum screen to determine if one company will have too much spectrum as a result of the deal. The Department of Justice has already started reviewing the deal, Marsh said.

Marsh also argued that the FCC should take LightSquared's L-band spectrum holdings into account when conducting its spectrum screen. AT&T also urged the FCC to take a more expansive view of the spectrum that Clearwire (NASDAQ:CLWR) operates in.

Consumer advocates pounced on the filing immediately. Gigi Sohn, president of public interest group Public Knowledge, said in a statement that AT&T will spend the next few months spending millions of dollars on lobbying efforts to get the deal through.

"All of that effort and all of that money cannot disguise the simple, fundamental fact that AT&T in this one transaction will fundamentally reshape the wireless industry in ways that will hurt consumers, raising prices, restricting innovation and limiting choice," she said. "The plain fact is that every one of the benefits AT&T promised to achieve can be accomplished without this merger."

Marsh countered that it would take AT&T eight years to build the same number of cell sites it will acquire through the purchase of T-Mobile.

Critics of the deal, in particular Sprint Nextel (NYSE:S), have argued that the deal will result in AT&T having excessive leverage over handset makers because of its scale. "I don't view the scale we're going to achieve here as a significant or any sort of threat, but without a doubt we think we will scale through this transaction," Marsh said.

In a statement released after AT&T's filing, Sprint's Senior Vice President Vonya B. McCann said "we are confident that when the FCC examines the record ... they will conclude that AT&T's attempt to acquire T-Mobile should be rejected outright."

For more:
- see AT&T's filing with the FCC (PDF)
- see this release

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FCC sets wheels in motion to review AT&T/T-Mobile deal
FCC's Copps pushes back against AT&T/T-Mobile deal
AT&T's Stephenson: T-Mobile deal likely will require divestitures
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