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Antitrust law professor and Rhodes Scholar Catherine Sandoval heads the state's Public Utilities Commission, which has held seven public discussions of the bid
By Olga Kharif
(Bloomberg) — AT&T Inc., looking to win approval for its proposed $39 billion acquisition of T-Mobile, is facing a challenge in California where regulators have raised questions about the deal’s effect on consumers and corporate customers.
The state’s Public Utilities Commission has held seven public discussions of the bid, under the oversight of Commissioner Catherine Sandoval. She’s delving into how a merger would affect rural communities, corporations and the evolution of wireless technologies. Through her scrutiny, the 50-year-old antitrust law professor and Rhodes Scholar may help determine whether AT&T’s bid succeeds or fails.
“This is pretty unheard of,” Brian O’Hara, a legislative director at the National Association of Regulatory Utility Commissioners, said in an interview. “California’s seems to be the most in-depth review. It’s amazing to me that the PUC is doing so much.”
State regulators can be something of an afterthought in big acquisitions. Federal authorities tend to be the primary focus, and AT&T’s is working in Washington to win approval from the Justice Department and the Federal Communications Commission.
Still, some states, led by California, are scrutinizing AT&T’s proposal, which would allow it to surpass Verizon Wireless as the biggest U.S. wireless carrier. The commission’s decision to start a formal investigation of the merger is an unusual step in a deal with one wireless company buying another. State officials historically paid closer attention to land-line phone service and, for decades, regulated such rates.
Watchdog’s Letter
The public-interest group Consumer Watchdog has recommended rejecting the deal, saying it will lead to higher prices. “Once known for its low prices, T-Mobile has already begun increasing its rates and decreasing options in anticipation of the merger,” Consumer Watchdog said in a letter to regulators, including Sandoval, U.S. Attorney General Eric Holder and FCC Chairman Julius Genachowski.
AT&T spokesman Michael Balmoris said the letter is “riddled with distortions and factual inaccuracies.”
Sandoval’s review may come at a high cost for AT&T. If the commission decides the deal would hurt consumers, California could force AT&T to divest wireless assets in certain regions or guarantee service coverage and cheaper service for the poor, said Courtney Munroe, a group vice president at IDC.
High Threshold
With the pressure from California and other regulators, AT&T may have to divest 30 percent to 40 percent of T-Mobile USA’s spectrum and subscribers nationwide, Michael Nelson, an analyst with Mizuho Securities USA, said in an interview.
“I expect the requirements to be extremely high,” he said.
California could even seek to block the deal outright, a step usually taken by the FCC or Justice Department. If federal regulators approve the deal and California objects, the commission could go to the state’s attorney general to file a lawsuit to stop it, said Naruc’s O’Hara.
“An attorney general lawsuit may be the only recourse,” he said.
AT&T said that states, including California, don’t have the legal standing to force wireless divestitures since such licenses are issued by the federal government.
“Federal law makes clear the FCC, not state commissions, has authority over spectrum licenses,” General Counsel Wayne Watts said in an e-mail.
AT&T Optimistic
The company, in any case, said it is confident California will approve the deal.
“We are optimistic that the CPUC will find that the merger is in the public interest and issue its recommendation with no conditions,” said Lane Kasselman, an AT&T spokesman.
Sprint Nextel Corp., which has publicly opposed AT&T’s deal, disputed that conclusion.
“We are confident that in California and at the FCC, after thorough reviews, AT&T’s proposal will be rejected,” said John Taylor, a spokesman for the Overland Park, Kansas-based company.
The California commission is planning to deliver a proposed decision in September, according to the schedule on its website. The five commissioners are scheduled to vote on the matter in early October. Sandoval declined to comment for this story.
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By Olga Kharif
(Bloomberg) — AT&T Inc., looking to win approval for its proposed $39 billion acquisition of T-Mobile, is facing a challenge in California where regulators have raised questions about the deal’s effect on consumers and corporate customers.
The state’s Public Utilities Commission has held seven public discussions of the bid, under the oversight of Commissioner Catherine Sandoval. She’s delving into how a merger would affect rural communities, corporations and the evolution of wireless technologies. Through her scrutiny, the 50-year-old antitrust law professor and Rhodes Scholar may help determine whether AT&T’s bid succeeds or fails.
“This is pretty unheard of,” Brian O’Hara, a legislative director at the National Association of Regulatory Utility Commissioners, said in an interview. “California’s seems to be the most in-depth review. It’s amazing to me that the PUC is doing so much.”
State regulators can be something of an afterthought in big acquisitions. Federal authorities tend to be the primary focus, and AT&T’s is working in Washington to win approval from the Justice Department and the Federal Communications Commission.
Still, some states, led by California, are scrutinizing AT&T’s proposal, which would allow it to surpass Verizon Wireless as the biggest U.S. wireless carrier. The commission’s decision to start a formal investigation of the merger is an unusual step in a deal with one wireless company buying another. State officials historically paid closer attention to land-line phone service and, for decades, regulated such rates.
Watchdog’s Letter
The public-interest group Consumer Watchdog has recommended rejecting the deal, saying it will lead to higher prices. “Once known for its low prices, T-Mobile has already begun increasing its rates and decreasing options in anticipation of the merger,” Consumer Watchdog said in a letter to regulators, including Sandoval, U.S. Attorney General Eric Holder and FCC Chairman Julius Genachowski.
AT&T spokesman Michael Balmoris said the letter is “riddled with distortions and factual inaccuracies.”
Sandoval’s review may come at a high cost for AT&T. If the commission decides the deal would hurt consumers, California could force AT&T to divest wireless assets in certain regions or guarantee service coverage and cheaper service for the poor, said Courtney Munroe, a group vice president at IDC.
High Threshold
With the pressure from California and other regulators, AT&T may have to divest 30 percent to 40 percent of T-Mobile USA’s spectrum and subscribers nationwide, Michael Nelson, an analyst with Mizuho Securities USA, said in an interview.
“I expect the requirements to be extremely high,” he said.
California could even seek to block the deal outright, a step usually taken by the FCC or Justice Department. If federal regulators approve the deal and California objects, the commission could go to the state’s attorney general to file a lawsuit to stop it, said Naruc’s O’Hara.
“An attorney general lawsuit may be the only recourse,” he said.
AT&T said that states, including California, don’t have the legal standing to force wireless divestitures since such licenses are issued by the federal government.
“Federal law makes clear the FCC, not state commissions, has authority over spectrum licenses,” General Counsel Wayne Watts said in an e-mail.
AT&T Optimistic
The company, in any case, said it is confident California will approve the deal.
“We are optimistic that the CPUC will find that the merger is in the public interest and issue its recommendation with no conditions,” said Lane Kasselman, an AT&T spokesman.
Sprint Nextel Corp., which has publicly opposed AT&T’s deal, disputed that conclusion.
“We are confident that in California and at the FCC, after thorough reviews, AT&T’s proposal will be rejected,” said John Taylor, a spokesman for the Overland Park, Kansas-based company.
The California commission is planning to deliver a proposed decision in September, according to the schedule on its website. The five commissioners are scheduled to vote on the matter in early October. Sandoval declined to comment for this story.
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