The New York State Public Service Commission has warned the FCC that AT&T's proposed acquisition of T-Mobile could significantly harm public interest and stifle competition for wireless services.
In a redacted document (PDF) made publicly available last week, the commission stops short of calling on the FCC to deny the $39 billion merger, but it urged the federal agency to closely evaluate on a market-by-market basis how it could impact wireless concentration. Though it plays no official role in the approval process, New York can influence the transaction by successfully arguing that state residents, particularly those in New York City, will be "disproportionally" affected.
"Wireless infrastructure and services are critically important to the citizens, and economy, of New York State," the letter said. "It is critically important that New York State consumers be protected against potential harm caused by further consolidation in wireless voice and broadband markets...We also urge the FCC to allow additional process, including opportunities for further review and comment, as the FCC moves forward in its review."
According to the letter, which the commission filed confidentially on May 31, the deal fails two tests that the FCC uses to analyze a company merger. Not only would it shut out new competitors from most New York markets, but also the merger would give the combined company more spectrum than the FCC permits.
"Both the market concentration and spectrum aggregation screening tools indicate the proposed merger may have anticompetitive impacts, and that these anticompetitive impacts will be felt, in particular, in New York State," the letter says. "Therefore, the FCC should carefully scrutinize the potential impacts of the proposed merger on New York State's wireless voice and broadband markets."
The commission also calls on the FCC to "impose conditions that effectively ameliorate, or mitigate" without stating what specific conditions it would accept. Divestiture is a likely scenario, and the state may call for such action as it further reviews AT&T's application.
New York is the third state to investigate the merger after California and Louisiana. New York Attorney General Eric Schneiderman announced March 29 that he would be scrutinizing the deal closely, but his office has yet to release any findings.