State Attorneys General to Examine AT&T/T-Mobile

New York Attorney General Eric Schneiderman will do a “thorough review” of AT&T/T-Mobile, which could open doors to “a near duopoly shared by the merged firm and Verizon,” the AG’s office said. Schneiderman said some market conditions may differ across the state, noting the potential impact in areas like Rochester, Albany, Buffalo and Syracuse, where there are already fewer wireless options. But he said the impact of the merger is likely to “be felt statewide.”

The proposed deal raises some concerns over “the competitive ramifications” in the wireless market and its effect on other related markets like broadband, Connecticut Attorney General George Jepsen told us. His office will be in contact with federal regulators and other states to determine the best approach to reviewing these competition issues, he said. AT&T looks forward to sharing information with AGs, said General Counsel Wayne Watts. The company “remains excited about the consumer and competition benefits” that the deal would provide, including improved customer service and expanded high-speed LTE wireless coverage to additional residents and areas across New York State and the rest of the U.S., he said.

State AGs typically look at cases where there’s a local impact, said James Donahue, chairman of the Antitrust Project, National Association of Attorneys General. During previous mergers like AT&T/Cingular and Verizon/Alltel, there were specific local coverage and market share issues, he said. If there are those issues with AT&T/T-Mobile, “I am sure the affected states will look at those issues,” said Donahue. He’s chief of the Antitrust Section of Pennsylvania’s AG.

State PUCs are evaluating their specific roles, said Brian O'Hara, NARUC legislative director. State-level authority over such deals varies greatly, he said. PUCs could have a major say in the eligible telecom carrier question in the merger, he said. T-Mobile is an ETC in Florida, Kentucky, Washington and Puerto Rico, according to data from the Universal Service Administrative Co. O'Hara expects the states in which T-Mobile has an ETC designation to have more interest in reviewing the deal, and they might seek specific commitments regarding the Universal Service Fund, which the FCC might require as well.

"It’s our understanding that states will not play a regulatory role” in AT&t/T-Mobile, a spokeswoman for the National Conference of State Legislators said. PUCs played no role in other major wirless deals like Verizon/Alltel and AT&T/Centennial, a former FCC official said. The deal isn’t likely to involve PUCs, the official said. State AGs typically collaborate with the Department of Justice’s review, he said. It isn’t surprising that states might want to assess the potential impact on consumers, particularly given the wireless substitution trend, said analyst Jeff Silva of Medley Global Advisors. “It’s unclear, however, how much weight scrutiny of the deal by states will carry” compared to merger reviews by the FCC and DoJ, he said. State jurisdiction is generally very limited in the wireless space, he said. “There will be nothing easy about getting the government to bless the AT&T/T-Mobile tie-up,” even if the history suggests the deal will get done “when the dust settles,” Silva said.

The proposed merger raises important questions about the impact on consumers, in light of the tremendous growth in wireless consumption, said California Public Utilities Commission President Michael Peevey. He'll ask staff to examine potential effects of the deal on consumers, he said. Peevey suggested opening a rulemaking to see if the consumer protections need to be modified or expanded in response to changes in the market, he said. He also seeks recommendations on what comments to submit to the FCC as part of its merger review.