WASHINGTON-The Federal Communications Commission today conditionally approved the $41 billion merger of Cingular Wireless L.L.C. and AT&T Wireless Services Inc., requiring the new No. 1 mobile-phone operator to scale back or forgo combined wireless operations in 22 markets. The decision received criticism from two Democratic commission members for not including consumer safeguards in regions where Cingular and its wireline Bell telephone parents are dominant.
The FCC ruling comes a day after the Justice Department reached an antitrust settlement requiring Cingular to sell wireless properties in 13 markets where the two mobile-phone firms have significant spectrum holdings. The wireless business deal is expected to close within days.
SBC Communications Inc., which holds a 60-percent stake in Cingular, and BellSouth Corp, which owns 40 percent of the Atlanta-based mobile-phone operator, have said little about anticipated layoffs resulting from the blockbuster deal.
The combination of the No. 2 and No. 3 wireless carriers gives Cingular 47 million subscribers and a presence in nearly all 50 states, including the top 100 U.S. metropolitan areas. Cingular, which replaces Verizon Wireless as the top U.S. carrier, uses European-engineered GSM technology. Verizon Wireless, which embraces CDMA technology, has more than 40 million subscribers and serves most states.
Two commissioners on the GOP-led FCC said the agency could have done more to protect consumers and competition.
“I must dissent to those parts of the order relating to the intermodal aspects of the merger … because of the increased potential for discrimination by the merged entities’ wireline parent companies and also because I find the lack of rigorous competitive analysis troubling,” said FCC Commissioner Michael Copps.
Fellow FCC Democrat, Jonathan Adelstein agreed, saying the FCC gave Cingular a “pass” on wireless-wireline intermodal competition issues.
“Unfortunately, the majority falls short in addressing the impact of the improved market position and incentives of Cingular and its parent companies in the SBC and BellSouth regions,” said Adelstein. “In many major in-region markets, Cingular now will have almost half of the mobile wireless market share. And in allowing the acquisition of AT&T Wireless, we permanently remove an independent source of competition to Cingular, SBC and BellSouth. The majority declines to adopt any condition to ensure that intermodal competition does not disproportionately suffer as a result of our approval of the merger. They do so even though the item itself concludes that intermodal competition will suffer as a result of this merger.”
A leading consumer group blasted the government’s approval of the Cingular-AT&T Wireless merger.
Mark Cooper, director of research at the Consumer Federation of America, said, “No matter how you cut it, this merger is anti-competitive. In major cities across the nation, such as Dallas; Orlando, Fla.; San Francisco; Memphis, Tenn.; Indianapolis; and New Orleans, La., this merger will allow the dominant local-phone company to control 40 percent or more of wireless customers, in markets where they also control 90 percent of residential wireline customers.”
Cooper added: “This merger will have a devastating impact on consumers, who may have to pay more and may not receive the same level of service they currently enjoy. It also will gut the incentive for these companies to come out with new and innovative products and services.”
