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AT&T’s Qualcomm Deal Remains in Question AT&T’s Qualcomm Deal Remains in Question

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Technology / TELECOMMUNICATIONS

AT&T’s Qualcomm Deal Remains in Question

FCC Chairman Julius Genachowski, offering consolation prizes.

December 5, 2011

When Federal Communications Commission Chairman Julius Genachowski called AT&T CEO Randall Stephenson last month to say he would fight the T-Mobile merger, he offered a consolation prize: He would support a separate AT&T spectrum purchase, according to an AT&T disclosure.

Genachowski circulated a draft order to the other commissioners approving AT&T’s proposal to buy $1.93 billion in spectrum from chip-maker Qualcomm. The Qualcomm deal predates the merger, but FCC staff studied them together because of the common questions they raised.

Now that AT&T has withdrawn its merger application and threatened to sue the agency, it remains to be seen what will happen to the Qualcomm proceeding as small wireless carriers push for a tough condition that could be costly for AT&T.

 

Genachowski’s order did not include a condition on “interoperability,” according to FCC aides speaking on the condition of anonymity because the order is not yet public.

Small wireless providers want the agency to require AT&T to build out sections of its spectrum with technology that will allow customers using the devices of other wireless providers to roam on it. Qualcomm had used the 12 Mhz of spectrum in the lower 700 MHz frequency band for its failed mobile-television service FloTV. AT&T could use it to expand the capacity of its 4G network.

Genachowski’s order on the Qualcomm deal needs two other commissioners to vote for it if it is to make it through the agency—something that remains in question.

Proponents of the interoperability condition appear to be focusing on FCC Commissioner Mignon Clyburn, a Democrat, as the swing vote. Representatives of rural wireless carrier C Spire met with her last week and, separately, with fellow commissioner Michael Copps, just days after the merger was rejected, according to disclosure filings. C Spire, formerly Cellular South, wants to ensure its customers will be able to roam on AT&T’s network.

“Approval of the proposed 700 MHz license assignment by QUALCOMM Incorporated to AT&T should be conditioned upon device interoperability across the entire Lower 700 MHz Band,” C Spire said in a filing with the FCC last month.

If the agency is still reviewing the Qualcomm transaction next year, two new commissioners may get to vote on the issue. Commission nominees Jessica Rosenworcel, a Democrat, and Ajit Pai, a Republican, answered questions about their positions on this issue during a Senate confirmation hearing last week.

Interoperability is “a big, complex question. It’s also a very important question,” Rosenworcel said. “I think something needs to be done to address this while also recognizing there are real technological challenges and costs to address this,” she said.

“I agree that an important balances needs to be struck. It’s critical for public-safety personnel and other constituencies … I would take the concerns of the small carriers … into account,” Pai said.

The FCC also has a separate rulemaking on whether to make interoperability rules, a proposal that would impact Verizon, rather than just AT&T.

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