@jbtaylor on tech

The last few days in the fight over AT&T's bid to takeover T-Mobile have been a blur, but today stood out. Because today, on behalf of consumers everywhere, the Federal Communications Commission struck what perhaps may be a fatal, knock out blow against AT&T's Ma Cell ambitions.

The Commission granted AT&T's and Deutsche Telekom's request to withdraw their AT&T/T-Mobile merger application from further agency consideration, but not before releasing the results of the agency's eight month long investigation into the transaction. The report's conclusions are devastating and inescapable.

And here's the rub: there's nothing in the report which would lead any objective reader to conclude that the FCC will react any differently if or when AT&T and Deutsche Telekom come back for a second attempt at FCC approval, a step the companies indicated the would take later, assuming they are successful against the Justice Department at trial next year.

Significantly, three out of four sitting FCC commissioners (Genachowski, Copps and Clyburn) issued formal statements endorsing today's Commission action, indicating that had AT&T and Deutsche Telekom not sought to yank their merger application on Thanksgiving Day, the Commission would have voted to move the matter to an Administrative Law Judge, a prelude to an inevitable official agency rejection.

But that's not even the best part. The best part is that now, with the report's release, the public, the financial analysts, investors and the Boards of both AT&T and Deutsche Telekom will see that the FCC doesn't accept any of the companies' main arguments surrounding the transaction. Most importantly, Judge Ellen Segal Huvelle, the judge trying the Justice Department's case against AT&T will see the report. I fully expect that Justice Department will introduce the report and other items in the FCC's merger docket as evidence at trial next year. Judge's tend to give a great deal of weight to the opinion of independent expert regulatory agencies.

We'll see what happens next. AT&T has 6 billion reasons to drag this out well into next year, so this is not over yet.

That's why I don't think the proverbial fat lady is singing, but I do think I hear her warming up.

p.s. Please remember that this is my personal blog and does not necessarily reflect the views of my employer.

On Friday, four senior leaders of the House Energy and Commerce Committee (Reps. Henry Waxman, John Dingell, Ed Markey and Rick Boucher) sent a very cordial letter to Michael Copps, the Acting Chairman of the FCC. seeking information about a complicated regulatory process call forbearance petitions.

Did I lose you now? Are you scratching your head?

Bear with me.

Several years ago, Congress established a process where certain regulated phone companies could file a formal request at the FCC to ask that the Commission no longer enforce certain regulatory requirements. The prevailing notion at the time was, the less regulation, the better for all concerned.

The lawyers call these requests "forbearance petitions". The idea is to set a basketball shot clock of sorts on the FCC to act on these requests. Basically the phone companies ask for regulatory relief and the FCC has X amount of time to decide whether or not the petition is approved.

Here's where this gets tricky.

If the FCC misses that deadline and the shot clock runs out, the request is automatically approved.

In theory, that made sense, but in practice, the landline phone companies like AT&T, Verizon and Qwest have showered the FCC with these forbearance petitions. Because there are so many petitions, it's sometimes difficult for the FCC, which is a relatively small agency, to give these documents a thorough reading.

What makes a difficult process harder is what Verizon recently did. At the last minute, just before the FCC was prepared to act on its forbearance petition, Verizon pulled the petition from review.

In other words, the FCC spent a great deal of time and money reviewing Verizon's request only to have the company change its mind at the last minute. Verizon, for its part, didn't offer much of an explanation for its regulatory cold feet at the forbearance altar. They claimed that the petitions were no longer needed because a court was expected to rule in the matter in a few weeks.

But the Wall Street Journal (http://bit.ly/7pFur) wrote that Verizon pulled the petition because Verizon expected the FCC would reject their request.

In that story, Acting FCC Chairman Copps said, "It just doesn't seem to be the way policy should be made. If somebody sees maybe it's going in the wrong direction, they can just say, 'Well, thanks. I'm outta here.'"

At Sprint, we're closely following this policy debate because we've opposed many of these forbearance petitions filed by the landline phone companies. These regulations are put in place to promote competition and to protect consumers. Often, we believe that removing the regulations will have the opposite effect.

We'll see what the FCC has to say to the Congressmen.