As the CTIA wireless trade show gets under way in Orlando, Fla., all eyes are focused on AT&T. It’s likely that federal regulators in Washington also have their eye on the $ 39 billion T-Mobile deal that would drive further consolidation in an industry that was once dominated by Ma Bell.
Federal Communications Commission Chairman Julius Genachowski declined to comment on the proposed acquisition, but analysts already expect AT&T will have to jump through hoops to get the deal done.
Sprint Nextel CEO Dan Hesse is “concerned” about the deal because AT&T and Verizon Wireless would own 79 percent of the market between them and might “stifle innovation.” And Verizon CEO Dan Mead has said his company is “very interested” in what’s going on. That signals opposition at the regulatory level.
Making Price Concessions
“The really big question is regulatory approval,” said Avi Greengart, an analyst at Current Analysis. “It’s readily apparent that this is a strong move for AT&T, and it solves a lot of problems for T-Mobile. The only question is how many concessions AT&T is going to have to make to get this through and whether or not it will still make sense at the end of the day.”
As Greengart sees it, there’s good reason for industry consolidation. The wireless carriers are all dealing with constrained broadband spectrum. In order to expand capacity, carriers have to buy spectrum from somebody. The T-Mobile deal, he said, gives AT&T additional spectrum for growth, as well as cell sites that can be put to use fairly quickly to improve coverage and capacity.
Mead has said that anything can get approved with enough concessions. The question is what concessions will the FCC demand?
“Typically, the government would ask the company to divest certain markets. The FCC may actually try to force price concessions because they are…
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