If there were ever any real wonder why AT&T wanted to swallow up T-Mobile - and there really shouldn't have been - the FCC has done a good job of laying it to rest.
In that same report, made public Tuesday to AT&T's heated objections, FCC investigators said the merger partners exaggerated the likely benefits and understated the probable harms of a deal that would cut the number of national wireless carriers from four to three and eliminate the carrier that typically offers subscribers the lowest price.
If the merger were allowed to proceed, the staff report said, an already concentrated market would lose a company that has served as a "disruptive force." As a result, the three surviving carriers would have more opportunity to raise prices and less incentive to innovate.
Like antitrust enforcement, an FCC review of a multibillion deal sometimes looks like a high-stakes chess game. But even in that world, this tale stands out.
It was just last week when FCC Chairman Julius Genachowski called for hearings on the deal, as the staff report recommended. His announcement was a clear signal of doubt that the deal met the FCC's standard to approve the transfer of spectrum licenses, a scarce resource: When all factors are weighed, the FCC says, a transfer must serve "the public interest."
AT&T and Deutsche Telekom, T-Mobile's owner, quickly countermoved. The day before Thanksgiving, they asked the FCC to withdraw their proposal, even as AT&T also made clear that it wasn't abandoning its merger hopes. Instead, it was still preparing to fight an antitrust lawsuit by the Justice Department and at least seven states, including Pennsylvania, that have challenged the deal as anticompetitive.
On Tuesday, the FCC allowed the companies to withdraw the proposal. But it also made its staff report public, if heavily redacted.
