FCC Stalls AT&T's $1.9B Bid for Qualcomm Spectrum

Jennifer LeClaire, <a href='http://www.newsfactor.com'>newsfactor.com</a>

AT&T is working feverishly to add spectrum to expand its wireless broadband network. But the Federal Communications Commission just put up a painful roadblock.

Late Monday night the FCC slowed its review process for AT&T's $1.9 billion offer for mobile broadband licenses from Qualcomm. The FCC has similar concerns with AT&T's proposal to acquire T-Mobile.

In essence, the FCC is slowing down in order to review both deals at the same time. That means it could take much longer for the Qualcomm deal to go through. AT&T bid on Qualcomm's spectrum licenses in the lower 700-MHz frequency band last December. AT&T's $39 billion T-Mobile bid came in March.

Qualcomm Speaks Out

On Monday night, the FCC issued a letter to AT&T and Qualcomm saying the agency's "ongoing review has confirmed that the proposed transactions raise a number of related issues, including, but not limited to, questions regarding AT&T's aggregation of spectrum throughout the nation, particularly in overlapping areas."

The FCC concluded that the best way to determine whether the proposed transactions serve the public interest is to consider them in a coordinated manner. The news comes just days after AT&T's lawyers hoped to get the FCC to wrap up its review of the proposed Qualcomm spectrum acquisition.

AT&T expects the deal to help the company provide an advanced 4G mobile broadband experience in coming years. The spectrum covers more than 300 million people nationwide. Twelve MHz of Lower 700-MHz D and E block spectrum covers more than 70 million people in five of the top 15 U.S. metropolitan areas: New York, Boston, Philadelphia, Los Angeles, and San Francisco. And six MHz of D block spectrum covers more than 230 million people across the rest of the U.S.

The "FCC should approve the pending AT&T-Qualcomm spectrum sale now because of the clear benefits to the public from the sale that stand on their own and are totally unrelated to the proposed AT&T-T-Mobile merger," Qualcomm said.

Twists and Turns

With the T-Mobile acquisition, AT&T is making a commitment to expand its LTE 4G deployment to 95 percent of the U.S. population. That means AT&T would reach an additional 46.5 million Americans, including more rural communities and small towns.

AT&T said it's pleased that the FCC, "preserved the ability for the Qualcomm application to be resolved in advance of the T-Mobile application. We remain confident that the FCC will approve the license transfers as consistent with the public interest."

Michael Gartenberg, an analyst at Gartner, said the FCC's decision demonstrates how many twists and turns can arise along the way to approval of a deal where there is plenty of public scrutiny.

"Sometimes deals that look like they should get done very quickly can take forever, and deals that you think should have taken forever sometimes go through very quickly," Gartenberg said. "Expect the opponents and proponents of these deals to increase the vocal expression of their opinion and to continue to legislate hard in Washington for their view to prevail."