T-Mobile Acquisition by AT&T Postponed until Early 2012

FCC decided to asses the ability of AT&T to provide high-speed wireless services to 97% of Americans before allowing it to acquire T-Mobile. As a result, the merger is delayed until the end of the year, or more probably, till early 2012.

The merger was announced in April and FCC was supposed to review this acquisition in 180 days, but it stopped the process on day 83. Many Americans are waiting for this to materialize, especially since one of AT&T’s promises is that it will assure high-speed wireless services for 97% of the population of the US. This is in fact one of the main things FCC has to test before approving the transaction.

According to an AT&T spokesman, “Requests from the FCC staff for additional information are to be expected given the detailed review they are undertaking. In this case, the FCC is seeking supplemental information on our commitment, following merger approval, to bring 4G LTE mobile broadband to 97 percent of all Americans.”

There is also the probability that FCC took the decision to make this assessment after receiving a letter from AT&T that contained confidential information. In that letter, the communication company admitted that expanding the network could cost only $3.8 billion, which is less than 10 percent of the $39 billion AT&T would have to spend for acquiring T-Mobile.

Provided that nothing else goes wrong, the assessment process should be finished at the end of the year. However, AT&T officials declared in an interview for New York Times that most probably the merger will take place in early 2012. The reason behind this delay, according to the company, is that all the concerned government departments should see the advantages of such a fusion.

In case the review process will end favorably for AT&T and the acquisition will go through, the resulting company will more than likely dominate the market and overshadow the competition. The risk of establishing a monopoly must not be neglected. In such a situation, the company would not be encouraged anymore to offer competitive prices, fact that ultimately affects the customers. Hopefully, the cheaper and more reliable services that AT&T commits itself to assure are not just an empty promise.

If you liked this post, please check AT&T’s iPhone 5 launch announcement and the data throttling issues of the company.