The Federal Communications Commission has stopped its formal review of AT&T Inc. (T) plans to acquire 700 MHz spectrum assets from Qualcomm Inc. (QCOM) as it now plans to review that deal in coordination with AT&T’s attempt to acquire T-Mobile USA Inc.
The decision came as the proposed AT&T/Qualcomm deal reached its 180-day point on its timeline for consideration.
“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.”
A number of companies came out earlier this year in opposition to the AT&T/Qualcomm deal, including Cellular South Inc., the Rural Cellular Association and Dish Network Corp. The opponents argued that allowing AT&T to accumulate rights to more spectrum will negatively impact competition. Short of an outright blocking of the deal, the petitioners offered a number of solutions, including divestitures and strict data roaming agreements.
AT&T Mobility announced plans late last year to acquire Qualcomm’s 700 MHz assets for $1.92 billion, in a move to bolster its 700 MHz spectrum holdings it plans to use for its LTE-based network. The Qualcomm assets amounted to 12 megahertz of spectrum in the lower 700 MHz D- and E-block bands covering more than 70 million people in New York, Boston, Philadelphia, Los Angeles and San Francisco, and 6 megahertz of lower 700 MHz D-block spectrum covering more than 230 million people across the rest of the country. Qualcomm was using the spectrum for its FLO TV business, which was shut down earlier this year.
The Qualcomm deal followed AT&T’s acquisition of Aloha Partners L.P.’s 12 megahertz of spectrum in the 700 MHz band covering 72 of the top 100 markets and all of the top 10 markets in the United States for $2.5 billion. Aloha Partners was initially using that spectrum to trial a mobile TV service.
AT&T had originally spent $6.6 billion during the FCC’s 700 MHz auction in 2008 on 20 megahertz of spectrum B-block band covering 82% of population in the top 100 markets.
The carrier earlier this year also filed plans with the FCC to purchase B- and C-block licenses from Whidbey Telephone Co. for an undisclosed amount. AT&T said at the time that the deal would augment capacity in the 30 counties covered by the licenses and would provide the carrier with between 18 megahertz and 55 megahertz of spectrum below 1 GHz bands. Those assets also include the carrier’s holdings in the 850 MHz bands that were “auctioned” by the government in the mid-80s.
AT&T has said the T-Mobile USA transaction would be essential for providing the carrier with sufficient spectrum to meet climbing demand for mobile broadband services. T-Mobile USA controls spectrum in the 1.7/2.1 GHz and 1.9 GHz bands.
AT&T said it still believes the two deals should be handled separately.
“We believe the Qualcomm transaction stands on its own merits,” an AT&T spokesman said in a statement. “We are pleased that the commission has rejected calls to officially consolidate the two deals and has expressly preserved the ability for the Qualcomm application to be resolved in advance of the T-Mobile application. We remain confident that the FCC will approve the license transfers as consistent with the public interest.”
Sprint Nextel Corp., which is opposing the AT&T/T-Mobile USA transaction, supported the FCC’s ruling.
“Given the complexity of the regulatory review of both proposed transactions, it’s a reasonable step for the FCC to coordinate the two reviews,” said Vonya McCann, Sprint Nextel’s SVP of government affairs in a statement. “The proposed transactions would produce game-changing effects on consumers and on competition in the wireless market. … Such a review makes abundant good sense and clearly is in the public interest.”
The headline and story were updated to clarify that the FCC does not plan to combine the review of the AT&T/T-Mobile USA deal with its review of the AT&T/Qualcomm deal, only that they are now on the same time line.
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