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FCC official: AT&T deal faces 'steep climb' for approval

'There's no way the chairman rubber-stamps this'

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An unnamed FCC official has said that AT&T faces a serious battle to win approval for its proposed $39bn acquisition of fellow GSM wireless carrier T-Mobile USA.

"There's no way the [FCC] chairman's office rubber-stamps this transaction. It will be a steep climb to say the least," the official told The Wall Street Journal. The official added, however, that the commission has not yet begun to formally investigate the deal.

On Sunday, AT&T announced it had agreed to acquire T-Mobile USA from Deutsche Telekom in a cash-and-stock deal valued at roughly $39bn. AT&T runs the largest wireless network in the US, with about 95.5 million subscribers, while T-Mobile runs the fourth largest, with 23 million, behind Verizon and Sprint. Whereas the Verizon and Sprint networks use the CDMA standard, both AT&T and T-Mobile use GSM, the same technology that's used in most major markets in the rest of the world.

Prior to the announcement, rumors had indicated that Sprint was angling to buy T-Mobile, and many were caught by surprise, questioning whether such a deal could win regulatory approval. "Was I surprised that T-Mobile got taken over? No. Was I surprised it was AT&T? More so," Rob Whitmore, the senior vice president of strategic consulting at Tangoe, an outfit that helps business manage their wireless use, tells The Register. "I thought that the regulatory scrutiny that this was create would be a barrier to AT&T making that move."

Clearly, AT&T believes the deal will be rubber-stamped. If it's not approved – per the contract between the two companies – AT&T must pay T-Mobile $3bn, transfer some valuable wireless spectrum to the company, and sign a roaming agreement "on terms favorable to both parties.

But concerns over the deal are manifold. This isn't just about the effect of the deal on competition and prices in the wireless market – although that's the biggest concern. Many T-Mobile users, including many Register readers, complain the deal will put an end to the relatively positive work T-Mobile has done with customer service. The company typically received the highest customer service ratings from JD Power.

And as security and privacy guru Christopher Soghoian points out, T-Mobile is also ahead of the rest when it comes to privacy. According to Soghoian, T-Mobile does not keep IP logs for its users. "What this means is that if the FBI, police or a civil litigant wish to later learn which user was using a particular IP address at a given date and time, T-Mobile is unable to provide the information," he says.

"If and when the Federal government approves this deal, T-Mobile's customers and infrastructure will likely be folded into the AT&T mothership. As a result, T-Mobile's customers will lose their privacy preserving ISP, and instead have their online activities tracked by AT&T.

"After this deal goes through, there will be three major wireless carriers, all of whom have solid track records of being hostile to privacy."

Regulators could take a year to examine the deal. ®

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