FCC to allow AT&T to drop application for T-Mobile deal

Federal Communications Commission (FCC) officials said Tuesday they will allow AT&T to withdraw its application to buy T-Mobile.

AT&T says it has not given up on completing the $39 billion deal but wants to focus on fending off the Justice Department's lawsuit, which alleges the merger would violate antitrust law by stifling competition. That case is scheduled to go to trial in February.

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AT&T decided to withdraw its application after FCC Chairman Julius Genachowski took a step towards blocking the deal last week. He circulated an order with the other commissioners that would have sent the merger to an administrative judge for further review. An administrative hearing would resemble a trial and could take months to complete.

FCC officials told reporters they had the legal authority to deny AT&T's request but opted not to exercise it. AT&T argued the FCC had no right to stop it from withdrawing its application, and threatened to sue the agency if it tried to stop the withdrawal.

The FCC also announced Tuesday it will publicly release the findings of its review of the merger.

FCC officials familiar with the the 109-page report said it concludes that AT&T did not prove the merger would benefit the public. 

FCC staff concluded the merger of the second and fourth largest wireless firms would reduce competition throughout the country's major markets, the officials said. FCC staff also rejected AT&T's argument that the deal would dramatically improve its wireless network, concluding that AT&T will likely upgrade its wireless technology with or without buying T-Mobile. 

The staff determined the merger would likely result in massive layoffs, not job gains, as AT&T has claimed in advertisements promoting the deal.

The FCC will share an unredacted version of the report with the Justice Department to use in its lawsuit to block the deal.

Jim Cicconi, AT&T’s vice president of legislative affairs, slammed the FCC for releasing the report and for not sharing it with the company first.

“This report is not an order of the FCC and has never been voted on. It is simply a staff draft that raises questions of fact that were to be addressed in an administrative hearing, a hearing which will not now take place," he said. "It has no force or effect under law, which raises questions as to why the FCC would choose to release it. The draft report has also not been made available to AT&T prior to today, so we have had no opportunity to address or rebut its claims, which makes its release all the more improper.”

The agency will leave its record on the merger proposal open, meaning that any meeting between FCC staff and the parties must be disclosed publicly. The FCC will restart the review if AT&T reapplies.