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AT&T Asked by FCC to Provide Evidence of Airwaves Shortage

AT&T's CEO Testifies Before Congress
Randall Stephenson, chairman and chief executive officer of AT&T Inc., speaks during a House Judiciary Committee hearing on telecommunications competition in Washington, D.C. on May 26, 2011. Photographer: Andrew Harrer/Bloomberg

May 27 (Bloomberg) -- Federal regulators asked AT&T Inc. to provide evidence of the airwaves shortage the company cited as a reason for its proposed $39 billion purchase of T-Mobile USA Inc.

The Federal Communications Commission in a request posted on its website today asked AT&T to provide “all plans, analyses and reports discussing the relative network spectrum capacity constraints of the company.”

AT&T in its April 21 filing with the FCC seeking approval of the merger said it “faces network spectrum and capacity constraints more severe than those of any other wireless provider.”

The FCC and Justice Department are vetting the deal proposed March 20 in a review AT&T executives have said will take about a year. The merger would combine the second- and fourth-largest carriers to create a new market leader, ahead of No. 1 Verizon Wireless.

“We will provide the FCC with all the data it needs,” Michael Balmoris, a Washington-based spokesman for AT&T, said in an e-mailed statement. The information request is “standard procedure” as the agency reviews a merger, he said.

The FCC asked for AT&T’s presentations to bankers and for details of the breakup fee associated with the deal for the Deutsche Telekom AG unit. A failure to complete the deal may mean AT&T would be required to pay to Deutsche Telekom a fee of $3 billion, according to a March 21 filing with the Securities and Exchange Commission.

‘In-Depth Look’

“We’re glad the FCC is taking an in-depth look at a very controversial transaction,” Art Brodsky, a spokesman for the Washington-based advocacy group Public Knowledge that opposes the merger, said in an interview.

Questions posed by the FCC included whether AT&T plans to continue carrying the T-Mobile brand, and whether the combined company would offer T-Mobile’s price plans.

T-Mobile competes by offering customers lower prices and its presence in the market helps restrain consumer costs, Gigi Sohn, president of Public Knowledge, said in congressional testimony May 11.

AT&T in its April 21 statement said the merger will create “thousands of jobs.” The FCC asked today for “all plans, analyses, and reports discussing the creation or loss of jobs.”

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net

To contact the editor responsible for this story: Allan Holmes at aholmes25@bloomberg.net

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