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FCC Joins Justice Department In Opposing AT&T, T-Mobile Merger

This June 2, 2010, file photo shows the AT&T logo in Washington, D.C. i

This June 2, 2010, file photo shows the AT&T logo in Washington, D.C. Etienne Franchi/AFP/Getty Images hide caption

itoggle caption Etienne Franchi/AFP/Getty Images
This June 2, 2010, file photo shows the AT&T logo in Washington, D.C.

This June 2, 2010, file photo shows the AT&T logo in Washington, D.C.

Etienne Franchi/AFP/Getty Images

The chairman of the Federal Communications Commission wants AT&T to prove that its merger with T-Mobile would be "in the public interest." Julius Genachowski sent the request for a hearing to the other three commissioners.

The move throws another roadblock in the proposed $39 billion merger. As we reported back in August, the Justice Department is already suing AT&T over the merger.

The New York Times reports on AT&T's reaction the latest news:

"Larry Solomon, senior vice president of corporate communications at AT&T, called the F.C.C.'s action 'disappointing.'

"'It is yet another example of a government agency acting to prevent billions in new investment and the creation of many thousands of new jobs at a time when the U.S. economy desperately needs both,' he said in a statement. 'At this time, we are reviewing all options.'"

CNet has a bit more on what the FCC chairman is worried about:

"In a briefing with reporters, FCC officials said that their evaluation of the deal found that the merger between AT&T and T-Mobile would create an "unprecedented" level of concentration in the wireless market. Officials went on to say that it was impossible to see how the deal could serve the public interest.

...

"FCC officials did not share many specifics from their report. But officials did say that their analysis shows that in 99 of the top 100 major U.S. markets, AT&T and T-Mobile are heavily concentrated in terms of customers. The only market where the two carriers do not exceed concentration limits is in Omaha, Neb., where T-Mobile doesn't operate its network. The agency used the Herfindahl-Hirschman Index to assess market concentration."

As we reported in August, another study found that the merger would "increase market concentration, reduce consumer choice, and open the door for price increases in the most heavily populated U.S. wireless markets."

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