Policy

FCC Approves AT&T's Qualcomm Spectrum Purchase

Puts Roaming and Interference Conditions on Deal 12/22/2011 9:54 PM Eastern

As expected, the Federal Communications Commission Thursday approved AT&T's proposed $1.925 billion purchase of spectrum from Qualcomm, a sort of a consolidation prize to the telco after the commission and Department of Justice combined to put the kibosh on AT&T's proposed $39 billion T-Mobile purchase, which it said was also about heavying up on wireless spectrum.

Exiting commissioner Michael Copps voted against the deal, and commissioner Mignon Clyburn only concurred, which is essentially an unenthusiastic "OK." But that was enough.

"Our analysis suggests that AT&T's proposed acquisition of Qualcomm's Lower 700 MHz D and E Block licenses has the potential to cause some competitive and other public-interest harms," said the FCC in its order. "We conclude, however, that these potential harms from AT&T's acquisition of this unpaired spectrum can be mitigated with certain targeted conditions to prevent or limit any potential anticompetitive behavior."

Principal among those conditions are that AT&T's use of the Qualcomm spectrum "does not impede actual and potential competitors' operation on neighboring spectrum in the provision of broadband services," and AT&T can't use that spectrum "in a way that deprives other providers of the benefits of the Commission's roaming rules."

On the upside, the FCC said, "we anticipate that the proposed transaction could well facilitate the transition of underutilized unpaired 700 MHz spectrum towards mobile broadband use, thereby supporting our goal of expanding mobile broadband deployment throughout the country."

Dish Network had argued AT&T should be required to spin off spectrum licenses it has in five metro areas where it is getting Qualcomm spectrum, but the FCC concluded that AT&T did not have to divest any spectrum to make the deal.

The FCC also declined to apply handset-exclusivity requirements or make AT&T build out the new spectrum according to a government timetable, as some commenters had requested, saying they were not transaction-specific. It also pointed out that it does not usually put conditions on pre-existing harms or harms unrelated to the transaction.

Copps said that with tougher public-interest conditions, he could have supported the deal, but that "While much of the competitive analysis [the] order was strong, the conditions the Commission does attach strike me as falling short of advancing the public interest demand." Copps was looking for an interoperability condition in particular. "The real issue in this and other acquisitions is not whether the harm we seek to address is limited to the immediate transaction," he said, "but whether the acquisition would make the problem worse. The answer here is yes, it would. By controlling more 700MHz spectrum, AT&T no doubt will have even more device buying power and with that power comes increased ability to prevent interoperability in this critical spectrum. "

Clyburn was also concerned about interoperability, which was the reason for her concurrence rather than yes vote. She said she would have preferred that the order found that lack of interoperability was "a merger specific issue that should be remedied by an interoperability condition," but seemed partly assuaged by FCC chairman Julius Genachowski's promise that he would open an interoperability proceeding next year.

September