FCC ASKS SERIES OF QUESTIONS ON AT&T-CINGULAR MERGER

Several of the questions appear to probe issues previously raised by the few critics of the merger in May comments to the FCC. The Wireless Bureau questions call for response by July 15, a tight timeframe.

One regulatory attorney said Fri. that the FCC seems to be sending a strong signal that the staff will closely examine the merger, even if only a handful of commenters raised questions in the merger docket. “They don’t want this to seem too easy or not thorough,” the attorney said. “A lot of it seems very high level” and could lead to further information requests. “The same type of question keeps coming up about is it really more effective to take 2 networks and combine them.”

The attorney said the FCC’s message is clear: “They're not going to just leave it to DoJ. The FCC is going to do their own work on this. They might find it interesting for other purposes helping them understand how the market is evolving.”

A 2nd regulatory attorney said the FCC appears concerned that the 2 systems together would control 80 MHz of spectrum, which is almost half of the 180 MHz available for CMRS nationwide.

“If you look at the record this is a huge transaction and they're asking for a green light for 80 MHz in all these markets,” the attorney said. “That’s a huge amount of spectrum. Nobody really filed in the docket. I suspect the Commission wants to ask the questions on their own to see if this 80 MHz market really is what they need.” The enquiry could open the door for the FCC and DoJ to order that the 2 carriers sell off some of their licenses, this lawyer suggested.

Mark Cooper, dir. of research for the Consumer Federation of America, told us the letter asks for information on several of the issues his group raised in one of the few comments objecting to the merger.

“What has happened is that the local market questions have started to assert themselves,” Cooper said. “The questions are very specific as to each license, each geographic area.” Cooper said the letter “shows there’s scrutiny” of the merger: “It ought to restart the merger clock. When you ask for that much information it shows the original application was grossly inadequate. We certainly want time to scrutinize this data and develop some reactions to it.”

Jonathan Lee, senior vp of CompTel/ASCENT, said at least one of the questions -- seeking data on SBC and BellSouth operations in all U.S. markets -- appeared to take on competitiveness issues the association raised in a May 20 filing. “That question of whether the ILECs provide any input services to the wireless carriers… goes directly to the questions we raised regarding the completely restrictive contracts those carriers have entered into with customers,” Lee said.

The letter requests information such as supporting data and analyses used by experts filing statements in support of the merger. The Bureau requests specific data on markets large and small, from N.Y. to Dixie, Fla., and Logan, Colo., such as performance metrics, cell site locations, handset capabilities, and licensed frequency band and specific frequencies per site per technology. The letter also asks about expected bottlenecks on the merged system, TDMA to GSM active and proposed conversion plans, and studies on the merger’s effect on the customer base.

DoJ formally issued a 2nd request for data from Cingular April 16, as well as from parents BellSouth and SBC. Sources at the companies said they complied, supplying all relevant data in early June. Although the Dept. requested a significant amount of data, sources said that isn’t unusual in a complicated merger case. Jessica Zufolo, an analyst with Medley Global Advisors, said she expected a 2nd round of questions. “We understand that DoJ will be looking at this a little more closely than anyone has been contemplating,” she said.