WASHINGTON-Consumer groups and cellular dealers asked the Federal Communications Commission to block the proposed merger of AT&T Wireless Services Inc. and Cingular Wireless L.L.C., while organized labor reiterated its support for the $41 billion transaction.
“This merger proposes an unacceptable level of concentration at the national level, clearly in violation of the merger guidelines,” stated the Consumers Union and Consumer Federation of America in a petition to deny filed with the FCC last week.
May 3 was the deadline for challenging the deal, which would marry the No. 2 and No. 3 mobile-phone carriers and create the largest wireless operator in the nation. Verizon Wireless is the top U.S. wireless operator today.
“Cingular and AT&T Wireless are the second- and third-largest carriers nationally, but in many local markets where Cingular’s parent companies are the monopoly landline telephone providers, these companies are the No. 1 and No. 2 players-a combination that proper antitrust scrutiny would surely block,” the consumer groups stated.
Cingular is 60-percent owed by SBC Communications Inc. and 40-percent held by BellSouth Corp.
Six nationwide mobile-phone operators dominate the wireless market. Fierce competition has steadily lowered monthly bills of consumers in recent years. With mobile-phone carrier costs and debt rising-owing to network upgrades, federal mandates and subscriber acquisition-Wall Street insists consolidation is not only essential but inevitable in the capital-intensive wireless industry.
Cingular agents, including at least one who sued the cellular operator, also urged federal regulators not to approve the merger. “Cingular’s alleged misconduct … is not limited to a single dealer, but is massive and widespread, raising serious questions as to its truthfulness in its dealings with other parties, including the commission,” the cellular agents stated.
“Cingular Wireless has not been served with any petitions to deny. However, we believe that Cingular’s acquisition of AT&T Wireless is in the public interest because the combined company will be able to provide customers with better call quality, better coverage, improved customer care and expanded capabilities, including a broader range of data services,” said spokesman Clay Owen early last week. “This acquisition should be approved as quickly as possible, so that consumers can benefit from all that the new Cingular will be able to provide.”
Cingular Wireless and AWS want to complete the merger by the end of the year. Despite the challenges, experts predict the FCC and Justice Department will approve the deal. As a condition of any approval, government antitrust lawyers could require Cingular to divest wireless holdings in some markets where it and AT&T Wireless control a significant amount of radio spectrum.
“Clearly, that will be a determination of the DoJ review,” said Brian Fontes, Cingular vice president for federal relations.
The Communications Workers of America endorsed the merger, saying it would improve service and not harm competition. In addition, CWA said, “Cingular is a recognized leader among U.S. corporations for its high-performance human-resources policies and progressive labor-management policies.”
U.S. Cellular Corp. used the proceeding to repeat its call for federal regulators to ensure that national carriers make roaming available to small- and mid-sized cellular carriers. U.S. Cellular told the FCC it fears national carriers someday might refuse to enter roaming agreements with smaller operators.
The Cellular Emergency Alert Service Association said the FCC should prevent the deal from going forward if Cingular does not set aside channels for hazard warning services.
Thrifty Call Inc., an integrated network service provider, said the proposed merger would allow SBC and BellSouth to discriminate against potential competitors in interconnection arrangements and special access services.
