AT&T/Leap Appears Close to Approval by FCC, Industry Officials Say
FCC work on AT&T’s proposed buy of Leap is proceeding, said industry officials opposed to and supportive of the deal, in interviews Monday. But they said they've heard little out of the agency in recent months. Monday was day 166 of the FCC’s unofficial 180-day clock for reviewing the transaction. AT&T is still on track for approval before the clock expires, a spokesman said. Other industry officials also said they expect approval soon of the approximately $1.2 billion deal.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
"The dialogue between AT&T and the staff seems focused on protecting the Leap subscribers and making sure AT&T will stay in the prepaid market and compete aggressively,” said Paul Gallant, analyst at Guggenheim Partners. “It looks as though the two sides are trying to work out the details of merger conditions, which would mean final approval shouldn’t be too far off."
"Unless there’s some unexpected snag, my sense is the FCC will complete its review of the AT&T-Leap deal by or close to the 180-day mark,” said Jeff Silva, analyst at Medley Global Advisors. “The assumption remains that the commission will approve the proposed transaction, likely with some conditions. It’s possible certain conditions may be in the final stage of negotiations, but otherwise I suspect the FCC has significantly completed its review and will be acting in the next couple of weeks. There have been no obvious signs suggesting major problems that would give rise to an extended delay.”
The transaction appears close to approval, but doing so raises questions about FCC Chairman Tom Wheeler’s broader competition policy and the concerns he has raised about a potential Sprint/T-Mobile deal, said an ex-FCC aide and current communications industry lawyer who doesn’t represent wireless carriers. A lawyer who has raised concerns about the deal said it seems to be moving forward, with FCC and AT&T officials negotiating over spectrum holdings in markets where the carrier would be over the commission’s screen, as well as roaming issues.
AT&T may have to wait for the FCC to review the Leap deal because the commission will need to factor in AT&T’s more recent proposed spectrum buy from Aloha Partners into the Leap review, said Carri Bennet, general counsel for the Rural Wireless Association (RWA). AT&T said in early January that it would buy 49 AWS-1 licenses from Aloha (CD Jan 8 p10). “I would think that the FCC is going to look at the Aloha Partners deal in total with the Leap deal -- and that’s going to slow down the Leap deal even further,” Bennet said. “Every time AT&T does another transaction on top of another transaction that the FCC hasn’t approved, they have to look at the whole bucket. You have to measure all of the spectrum in all of the markets, and I'm sure the Aloha spectrum overlaps with Leap in some places.”
FCC Lobbying
AT&T made the last ex parte filing on the transaction posted by the FCC. The Feb. 26 filing reported on conference calls AT&T Vice President Joan Marsh had with Hillary Burchuk of the Office of the General Counsel and Susan Singer of the Wireless Bureau. Marsh said she discussed “the significant public interest benefits that the transaction will achieve without causing any harm to competition” during the call (http://bit.ly/1n3230G). “We discussed AT&T’s plans for migrating Leap customers following close of the transaction, including rate plans that AT&T plans to offer upon launch of the New Cricket; potential incentive offers to provide further encouragement to Leap customers to migrate to the New Cricket; and alternative providers of prepaid Lifeline service should Leap Lifeline subscribers wish to choose another carrier,” Marsh said. She reported Feb. 25 on an earlier call, also with Burchuk and Singer. Topics included “AT&T’s spectrum holdings in various [markets]; AT&T’s LTE deployment; AT&T’s plans to deploy Leap’s AWS and PCS spectrum to enhance AT&T’s LTE network; and the roaming services that will be offered post-transaction,” said an ex parte filing (http://bit.ly/1n33n3T).
Also last month, Competitive Carriers Association President Steve Berry and others from the group met with FCC officials to discuss roaming and spectrum holdings. “CCA discussed its carrier members’ challenges in obtaining access to useable spectrum and obtaining reasonable roaming arrangements, particularly 4G LTE roaming arrangements,” association officials said, according to an ex parte filing (http://bit.ly/1jMPw06). “The Transaction, if granted unconditionally, would exacerbate these difficulties.”
CCA also pointed to spectrum concerns, saying the deal would put AT&T over the screen in 38 cellular market areas (CMAs). “AT&T has not presented adequate evidence of its need for spectrum in these markets that should justify allowing it to vastly exceed the currently-established screen,” CCA said. “To mitigate this negative, transaction-specific harm, CCA urged the Commission to condition any grant of the Transaction on significant spectrum divestitures -- at a minimum in any market where the combined AT&T/Leap would exceed the Commission’s current spectrum screen."
The deal has faced opposition. Public Knowledge, Consumer Action and Writers Guild of America in September asked the FCC to reject the deal. “The Applicants fail to meet their affirmative burden to show that these harms are outweighed by potential public interest benefits, and the Commission should accordingly deny the Applications,” they said (http://bit.ly/199dvOG).
RWA raised concerns about the spectrum market power issues raised by the AT&T/Leap deal, saying in an FCC filing that if the deal clears, AT&T will hold more than 25 percent of all suitable spectrum in 70 percent of the counties involved in the Leap deal (CD Nov 4 p6). The Leap deal would include spectrum covering 137 million people in 356 CMAs, according to joint AT&T/Leap comments filed with the FCC. The Leap deal would trigger the commission spectrum screen in 38 CMAs, which hold a population of 7 million people, according to the AT&T/Leap comments. The spectrum involved in the Aloha deal covers 50 million people in 14 states. RWA plans to file comments opposing the Aloha deal, Bennet said Monday. ,