The U.S. Department of Justice’s anti-trust division on Wednesday approved AT&T’s acquisition of BellSouth, saying the deal likely would not reduce competition substantially or harm consumer welfare, but DOJ’s unconditional approval ignited a firestorm of protest from consumer groups and the FCC’s two Democrats, setting the stage for a showdown at the FCC tomorrow.
The deal is estimated to be worth nearly $80 billion. Atlanta-based BellSouth and San Antonio-based AT&T (previously known as SBC), first announced the $67 billion deal in March.
AT&T and BellSouth also co-own Atlanta-based Cingular Wireless, the nation’s largest cellular carrier.
The merger is not likely substantially to lessen competition in the provision of wireless broadband services. The combination would not significantly increase concentration in the ownership of spectrum in any geographic area or give AT&T control over a large enough share of spectrum suitable for wireless broadband services to raise competitive concerns.
“This unequivocal and unconditional approval underscores the competitive nature of our industry and the pro-competitive benefits of this merger,” AT&T general counsel James Ellis said in a statement. “AT&T is focused on bringing more video choices and next-generation broadband services to as many consumers as possible and our merger with BellSouth will help deliver these benefits to more consumers, more quickly.”
Om Malik says Senators Mike DeWine (R) and Herb Kohl (D) want AT&T/BellSouth combo to divest some of their WiMAX spectrum.
DeWine, chairman of the Senate Judiciary Antitrust Subcommittee, and Kohl, the panel’s top Democrat, noted in their letter that a merged AT&T-BellSouth would control substantial spectrum in the 2.3-gigahertz and 2.5-GHz bands. As a result, fewer frequencies would be available for competitors to offer high-speed, wireless Internet service with the WiMAX technology, they said.
The two companies are 60 percent and 40 percent owners, respectively, of Cingular Wireless, the largest U.S. mobile carrier, notes RCR News. BellSouth has considerable WiMAX spectrum, especially at 2.3 GHz.
The primary home for Mobile WiMax will be the 2.5 GHz band (now called BRS). As of November 2005, over 1,700 BRS Licenses were listed on the FCC’s ULS License Search web site. Maravedis estimated the broadband wireless licensees (below), from the FCC’s ULS License Search web site.
| Licensee | PSA | BTA | Potential Subs |
| BellSouth Wireless | 36 | 6 | 9,070,577 |
| Clearwire | 59 | 24 | 4,693,347 |
| Nextel/Sprint | 268 | 198 | 157,519,832 |
Protected Service Areas (PSA) is an exclusive license service granted comprised of a 35 Mile Radius surrounding the licensed transmitter site. Basic Trading Areas (BTA) is geographic region defined by a group of counties that surround a city as formulated by Rand McNally. There are 493 BTAs in the U.S.
“WiMAX is a profoundly disruptive technology,” says Nortel. “It will change the way content is delivered, the way users access information and entertainment as well as the economics of wireless operators”.
FCC commissioner Michael Copps, at a West Virginian summit to discuss the state broadband penetration laments broadband “policy” in the United States:
“As far as I can tell, we’re the only country on the face of God’s green earth that doesn’t have a broadband strategy,”
BellSouth is pushing 2.3 GHz and has considerable 2.5 GHz holdings. Some in the industry worry that BellSouth/ATT will “sit” on the spectrum rather than compete with its Cingular 3G cellular service. The FCC was expected vote on the merger tomorrow, but action could be postponed because Chairman Kevin Martin appears to lack the votes necessary for approving the merger free of conditions, reports RCR Wireless.
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Let’s Make A Deal
How might a brokered deal benefit consumers? What if BellSouth donated the 2.3 “junk” band to municipalities. Cyren Call may have a workable model. They urged the FCC to establish a Public Safety Broadband Trust to hold licenses in the 700 MHz band for joint public safety and commercial use. M2Z, a company funded by venture capitalists, has another possible model. They hope to launch a free nationwide broadband wireless network giving a 5% kickback to the federal government on any profit. Senator Clinton proposed a Rural Broadband Innovation Fund. Consumers, municipalities and public-safety officials at all levels of government might applaud mobile WiMAX on 2.3 GHz. It might be one political solution that would probably have minimal impact on the bottom line of a merged AT&T/BellSouth. Meanwhile, the FCC might enforce its own regulations on satellite radio repeater power limitations. - Sam |
Bush appointee Martin seems to buy into the San Antonio school of philosophy — divide up the AWS spectrum for cellular operators — not Mobile WiMAX — and turn the internet into pay cable. Nobody would disparage Martin for wanting to make a fortune like Kennard or Wiley.
But the public trust should come first.
