Analysis: AT&T mega merger bad sign for spectrum reform

AT&T's $39 billion bid to buy Deutsche Telekom AG's T-Mobile casts doubt on the US government's ability to swiftly deliver policy to meet the booming demand for wireless services.

Wireless companies have long lobbied for help to deal with what they see as a looming "spectrum crunch" as more consumers turn to mobile devices. AT&T -- the No. 2 U.S. mobile carrier often criticized for dropped calls and slow connection speeds -- is not waiting for government remedies intended to free up airwaves for mobile broadband to help it meet ever-growing demands for video and data. But the move could slow legislation needed to free up spectrum for auction to wireless carriers, a potential thorn in the Federal Communications Commission's agenda. "The way things work in Congress, there's competition for what issues get the lawmakers' time and resources," Medley Global Advisors analyst Jeffrey Silva said. Top lawmakers have already signaled an interest in scrutinizing the large-scale transaction. Paul Gallant, an analyst with MF Global, said AT&T's bid for T-Mobile puts a dimmer outlook on the likelihood of lawmakers moving spectrum legislation this year. But the "win-win-win outcomes" of incentive auctions freeing up airwaves, funding a public safety network and reducing the deficit will prompt lawmakers to act by 2013, Gallant predicted. A senior FCC official, who spoke on condition of not being named, said any potential shifting of existing spectrum among wireless companies does nothing to solve the fundamental problem of making more spectrum available to ease the crunch the wireless industry faces.