@jbtaylor on tech

When the U.S. Department of Justice filed its antitrust lawsuit to stop AT&T's proposed takeover of T-Mobile, the California Public Utilities Commission (CPUC) essentially put its investigation on hold.

In a short statement on the CPUC's website, which was posted a few days after the DOJ filed its lawsuit in August, the CPUC said it was, "working to assess the effect of the DOJ development on our proceeding, and further information on the schedule for this proceeding will be forthcoming."

Well quietly this week, that promised "further information" was announced by the CPUC.

On Nov. 16, the CPUC's Administrative Law Judge investigating the proposed transaction announced a new schedule for comments on AT&T's economic and engineering models which were filed at the CPUC in August.

Comments are now due on Dec. 12. Reply comments are due Dec. 20. These comments were originally due in September.

What prompted this step?

Well, we know that oral arguments in the U.S. v. AT&T trial begin in February. My guess is that the CPUC wants to wrap up its investigation and make a decision before then, or at least before Judge Huvelle announces her ruling in the court case, which could happen as soon as March.

I'm also speculating that the CPUC got a better idea of what's going in the FCC's investigation when CPUC officials met with Federal Communications Commission officials earlier this fall in Washington.

If I were a CPUC Commissioner, in addition to acting before the judge rules, I'd also want to make a decision before the FCC takes any action in its docket. Observers in Washington are increasingly speculating that the FCC will issue a "Hearing Designation Order", which would send the whole matter to the FCC's Administrative Law Judge. That's a required step for the FCC to take if it is going to block the merger.

It wouldn't surprise me at all if the CPUC issues some sort of decision before the FCC takes such a step. But first, the CPUC's Administrative Law Judge needs to wrap up her investigation.

Announcing new due dates for these comments is a step in that direction.

But all of this is speculation on my part. It's never a wise idea to presume what's in the mind of a regulator.

That said, it IS a good idea to look at what the law says. Under California law, the CPUC has broad discretion to determine whether or not AT&T's proposed transaction is, "in the public interest" of the people of California.

They could approve the transaction, impose conditions or block it entirely. If the CPUC blocks the transaction, AT&T would be unable to close the transaction in California, even if the company beats the Justice Department in court and convinces the FCC to approve its merger application.

That's why observers following AT&T's bid to takeover T-Mobile should not overlook what's happening in San Francisco.

Remember that children's book about the boy named Alexander and his bad day? The full title of this classic is, "Alexander and the Terrible, Horrible, No Good, Very Bad Day."

The story goes that Alexander has so many things go wrong with his day that he decides he wants to run away and move to Australia. At the end, Alexander's mom assures him that everyone has bad days, even people in Australia.

AT&T had just that kind of day today.

This afternoon, Bloomberg reported that, for the first time, a group of 32 analysts polled by the firm Stifel Nicolaus now predicted that the proposed T-Mobile takeover has less than a 50 percent chance of gaining regulatory approval.

Following that news, media reported than an AT&T attorney mistakenly disclosed confidential documents which were meant to be redacted before being uploaded to the FCC's website. The documents were removed from the FCC's site quickly, but not before news media saw them and reported their contents. The big disclosure is that AT&T considered, then rejected a $3.8 billion proposal to build out 4G to 97 percent of all Americans prior to offering $39 billion to Deutsche Telekom to takeover T-Mobile. All of that confirms what takeover critics have said all along: AT&T doesn't need to takeover T-Mobile to build out 4G. The elected officials who have endorsed this takeover were told flatly that purchasing T-Mobile was the ONLY path to 4G. Now we know that isn't true. So it begs the question, what's AT&T's true motivation?

The day got worse when the Wall Street Journal reported that AT&T has hired Bank of America and Merrill Lynch to explore divesting assets worth an estimated $8 billion in an effort to secure regulatory approval. Given that the FCC's regulatory review and the Justice Department's investigation is still in its early stages, this begs the question, is AT&T finally admitting that this stinker of a deal really stinks?

Oh and before the day ended, the California Public Utilities Commission has made a rather extensive data request of AT&T, T-Mobile and other wireless carriers in the state in a effort to learn more about the impact on consumers. Earlier today, the Commission announced that it was pushing back the schedule of its review by about a month in an effort to learn more about AT&T's "new" economic model being used to justify the transaction. As Bloomberg reported earlier this week, California is conducting what one industry observer called, "the most in-depth review [among the states]."

The good news for AT&T is that today is over. The bad news is that as the public learns the truth about this proposed transaction, their opposition is only increasing. To date, this proceeding has generated more comments at the FCC from individual citizens than any other in FCC history. And unfortunately for AT&T, people are opposed to them by about a 10 to 1 margin.

No matter how many elected officials and civic groups AT&T trots out to call for approval of this stinker of a deal, the public who they purport to represent are calling for the government to reject AT&T outright.

If I were AT&T, I'd consider moving to Australia.

The Wall St. Journal is out with a story tonight which points to growing opposition to AT&T's plan to takeover T-Mobile. The story will be in tomorrow's paper.

It highlights the following:

• New opposition from Leap Wireless, the company behind Cricket; 
• Concerns from Metro PCS; 
• The decision by the California Public Utilities Commission to investigate the proposed transaction, as well as a decision 2 weeks ago by the Louisiana Public Service Commission to do the same; 
• Recent decisions by the Justice Department to block other "horizontal" mergers; 
• The FCC's Friday letters to AT&T and Deutsche Telekom asking the companies 97 additional questions about the proposed transaction; and 
• Last week's Congressional hearing where Republicans joined with Democrats in asking questions about the proposed transaction.

The story quotes two industry analysts expressing doubt about AT&T's plans getting approved.

"AT&T opened with such a tightly controlled and well orchestrated launch, they controlled the story line for awhile," said Rebecca Arbogast, an analyst with Stifel Nicholas. "Now we are seeing some say, 'Wait a minute, is this really the market structure we want in the U.S.?' "

Arbogast's remarked were followed by some from Craig Moffett, an analyst with Sanford C. Bernstein. "The air of inevitability has drained away," Moffett said.

Perhaps that's why AT&T's CEO Randall Stephenson looks so angry in this photo I snapped of him at last week's House Judiciary Subcommittee hearing on the proposed T-Mobile takeover.

Things are just not going well for AT&T.

p.s. I have more pictures and details from the hearing in my previous post. Be sure to click on each photo and read the captions. (That's the best part!)

Earlier today, the California Public Utilities Commission voted to open an investigation into AT&T's bid to takeover T-Mobile.

Sprint issued the following statement to media:

“Sprint is pleased that the Commission will open up a proceeding to investigate the proposed takeover of T-Mobile by AT&T. We believe a thorough investigation will reveal the negative implications for pricing, choice and innovation, critical to California’s economy.”

Earlier this week, the Louisiana Public Service Commission voted 4-1 to open a regulatory docket to review AT&T's bid to takeover T-Mobile.

In an interview with Bloomberg News, Louisiana Public Commissioner Foster Campbell said, "It’s too big a deal to let it go through without getting everybody’s questions answered, and making sure this is a good deal for the consumer."

AT&T for its part, argued unsuccessfully against such a review.

Of course this is a pattern with AT&T. Their lobbyists are working overtime to convince state regulators that they shouldn't weigh in. They don't want anyone to ask them any questions.

The action isn't limited to Louisiana, though.

Today Sprint filed documents in San Francisco calling on the California Public Utility Commission to open an investigation into the transaction. We also responded in West Virginia to AT&T's ridiculous assertion that we had no right to call for a hearing there because we don't operate a 4G network in the state. (They also criticized Sprint because our workers have not chosen to affiliate with a union.)

We said in part that West Virginia regulators “should not be distracted by the sideshow AT&T has presented.”

Our filing went on to say that we think that the proceeding in West Virginia is not about Sprint, but that it, "is about consumers, innovation, competition and the future of the wireless market in West Virginia,”

p.s. The photo of this post is one I took in New Orleans last year in Jackson Square. You can just make out the statue of Andrew Jackson, the hero of the Battle of New Orleans and a former President of the U.S. Jackson was a president who believed in listening to the public. He once famously said, "You are a den of vipers and theives. I intend to rout you out, and by eternal God, I will rout you out."

For the record, he was not referring to AT&T as the company had not yet been formed. His remarks were aimed at those seeking to establish a banking monopoly. I can only imagine what Jackson would think about AT&T's bid to takeover T-Mobile -- for that matter, cell phones in general.