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Posted at 11:47 AM ET, 04/13/2011

FCC chief hints at lack of competition in AT&T merger bid

The chairman of the Federal Communications Commission won’t talk directly about AT&T’s bid to buy T-Mobile, but he did hint at the agency’s thinking about competition – the key to determining whether to pass the deal.

When asked Tuesday if the wireless industry is competitive enough, Julius Genachowski pointed to an FCC report last May on the issue. And what’s interesting is that nowhere in the 281-page report did the FCC say the wireless industry is effectively competitive. That omission was significant, analysts say, because for all the reports before that the agency had concluded that there was enough competition.

 “We released a competition report that looked at a whole series of metrics and trends,” Genachowski said by phone from the National Association of Broadcasters convention in Las Vegas. “We looked at real areas of vibrancy and areas where there were questions and concerns.”

 Specifically, the FCC report found: “There appears to be increasing concentration in the mobile wireless market. One widely-used measure of industry concentration indicates that concentration has increased 32 percent since 2003 and 6.5 percent in 2008.”

 AT&T will argue that there are at least four carriers and sometimes five to choose from in most major markets. But consumer groups say the two biggest firms are just getting bigger, and the smaller competitors are losing subscribers or having trouble keeping up. It doesn’t help, they say, that the top carriers have exclusive deals with Apple for the iPhone and iPad and other hot devices.

 Here are some key numbers that regulators will consider.

AT&T and T-Mobile will have 130 million customers, or 46 percent of all U.S. mobile subscribers.
AT&T and Verizon Wireless will control 80 percent of the market.
Sprint Nextel will have 50 million customers, or 17 percent of the market.

 “I have to be careful here. I won’t talk about transaction or review,” Genachowski said. “We will look at work the commission has done and metrics” in the report.

 He said the FCC is working on policies such as a “bill shock” proposal that would protect consumers of wireless services from being hit by surprise overcharges and sudden increases in their bills. But he said he doesn’t yet know when that measure – opposed by wireless carriers – will come up for vote.

At the NAB conference, Genachowski said his talks with broadcasters were productive and that he is optimistic he will get cooperation for incentive auctions for using television airwaves for mobile broadband. Broadcasters have criticized the plan, and some experts estimate it could take as long as seven to 10 years to get auctions up and running. Congress would have to approve the plan, broadcasters would have to give up airwaves, and the FCC would have to repackage the spectrum and make rules for distribution.

But Genachowski estimates that if legislation for auctions is approved this year, carriers will be able to bid for airwaves within three years.

Related stories:

AT&T agrees to buy T-Mobile for $39 billion

Faster cell phones bring wave of new services, and charges

AT&T executive confident of merger

By  |  11:47 AM ET, 04/13/2011

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