StimulatingBroadband.com 03/11/2011 San Francisco - A coalition of public interest groups today asked the Federal Communications Commission to just say no to the proposed $1.93 billion acquisition by AT&T (NYSE: T) of valuable 700 MHz spectrum in markets across the country from Qualcomm Incorporated (NASDAQ: QCOM).
The Qualcomm licenses, which now cover more than 300 million people nationwide, were used to turn up Qualcomm's mobile video venture, Flo TV, which will close March 27.
The groups told FCC in today's filing "the transfer does not serve the public interest, the primary criterion on which the Commission is supposed to approve or reject such proposals", according to Free Press. The coalition asked the Commission to deny the acquisition by AT&T, "and instead to make the spectrum available for unlicensed use, or at a minimum, to place conditions on the sale that advance the public's interest."
|Goodbye FLO, on March 27|
Goodbye FLO TV
AT&T in late December announced agreement to pay Qualcomm $1.93 billion for the wireless real estate if FCC and DOJ give their approvals. Qualcomm acquired the spectrum for FLO TV, which Eric Savitz over at Forbes.com says "never really caught on." Qualcomm, the developer of the CDMA wireless protocol and the chipsets that make it work, will shutter the service this month. The San Diego based firm will take a charge of between $125 million and $175 million, according to Savitz.
Groups Most Prominent in Net Neutrality Fight
The groups - Free Press, Media Action Project (MAP), Public Knowledge, Consumers Union, and the New America Foundation’s Open Technology Initiative - argued that FCC should "deny AT&T’s proposed acquisition of Qualcomm licenses in the 700 MHz band," according to a MAP release of late this afternoon. In this the organizations are taking a quick break from battling House Republican attempts to roll back the Open Internet Order of the FCC. They are pushing in favor of what many see as equally noisome to the Grand Old Party: Competition.
Today was the deadline set by the Commission for petitions to deny the take over effort, as part of the proceeding conducted by the agency's Wireless Bureau.
"If approved, the transaction would give AT&T an even greater share of spectrum ideally suited for mobile broadband services, increasing AT&T’s power in a market it already dominates along with Verizon Wireless," said the press statement from MAP, the Washington-based public interest lobby.
The the public interest groups fear greater consolidation in the wireless market space, and a resulting further entrenchment of the AT&T vs. Verizon (NYSE: VZ) effective duopoly in most U.S. metros. Business analysts and investors see the deal for Qualcomm spectrum as a done deal by AT&T as it seeks to shore-up networks in the face of surging demand for wireless broadband.
AT&T Plays Competitive Bandwidth Catch Up vs. Verizon
As AT&T and Verizon gear to win the 4G race, Verizon is clearly ahead with a more robust network and not suffering from the customer angst generated as AT&T's network could not sustain the surging demand for 3G service as launched its exclusive carrier deal for the iPhone of Apple Inc. (NASDAQ: AAPL). The Qualcomm 700 MHz national spectrum inventory, itself with greater bandwidth in precisely some of the same metro markets which have most bedeviled AT&T, is a competitive asset needed by the carrier.
As the AT&T and Qualcomm trumpeted the deal late last year, wireless sector analyst Mark McKechnie of San Francisco's Gleacher & Co. talked of the tie-up as a fully done deal. He saw the spectrum buy as a necessary move by AT&T seeking to close an estimated is a "9 to 12 month" head start held by Verizon over AT&T in network readiness for a national launch of 4G services.
Our Take: Could an array of public interest groups deliver an unexpected knock out punch to the $2 billion spectrum deal sought by AT&T? The filing of the groups itself tell us it is not likely, as it contemplates mitigation strategies should FCC approve the acquisition has much as it argues against the deal on the fundamentals of market power.
An FCC that approved the Comcast - NBC merger over the howls of these same groups, let alone in the face of a the fierce dissent from Commissioner Michael Copps, is unlikely to go thumbs down on a wireless license transfer. AT&T will get its needed spectrum to better compete against not only its rival Verizon, but against any potential new entrants.
The American wireless sector will become that much more concentrated, as the FCC further enshrines our national unwired duopoly and calls it competition.
AT&T Qualcomm Petition to Deny 03112011