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FCC slips dagger into AT&T, T-Mobile merger

'AT&T's thousands of jobs claim? Pure codswallop!'

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The US Federal Communications Commission has thrown a major stumbling block in the way of AT&T's proposed $39bn acquisition of T-Mobile by taking the unusual step of requesting an administrative hearing on the merger.

Such administrative hearings are rare, and as The Wall Street Journal points out, the last time such a step was taken – when EchoStar and DirecTV attempted to merge in 2002 – the two companies eventually threw in the towel.

The FCC's move is the "two" of an Obama administration one-two punch against the deal, coming as it does after the US Department of Justice filed an antitrust suit in late August to block the merger.

According to IDG News, FCC staffers say that the deal would be anticompetitive and not in the public interest.

The FCC officials, speaking at a press briefing, also took issue with AT&T's claims that the merger would create thousands of new jobs, saying that it would instead lead to "massive" layoffs – which, of course, is a common result for such mergers.

Surprising no one, AT&T also used the "j-word" in its response to the FCC move. "It is yet another example of a government agency acting to prevent billions in new investment and the creation of many thousands of new jobs at a time when the US economy desperately needs both," AT&T's top mouthpiece Larry Solomon said in a statement.

Open-internet group Public Knowledge, which has vocally opposed the merger, was understandably tickled pink at the FCC's move. "Public Knowledge has argued for this course of action ever since the DoJ filed ... and the FCC should be commended for taking this action," that organization senior staff attorney John Bergmayer wrote in a statement.

"The FCC isn't doing this because Public Knowledge, our public interest allies, and prominent industry voices have asked it to," Bergmayer added. "It's the right thing to do, given how strong the evidence against the merger is, and how flimsy and self-serving AT&T's arguments are for it."

Although the request for the administrative hearing came in a draft order signed by chairman Julius Genachowski, that order must still be approved – or amended – by the full commission. However, seeing as how one of the two Republicans seats on the committee was recently vacated when commissioner Meredith Baker resigned earlier this year to become an NBC lobbyist, the Democratic three-to-one majority is a good bet to approve the request.

The administrative hearing would be held after the DoJ's antitrust trial is completed. ®

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