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[Commentary] Federal Communications Chairman Julius Genachowski prudently declined to cast judgment yesterday on the merger that would create the country's biggest telecommunications company. But give him credit for fingering the underlying problem that AT&T's $39 billion bid for T-Mobile USA is trying to solve: "unsustainable demands on our invisible infrastructure -- spectrum."

By buying T-Mobile, AT&T at one shot would acquire 34 million subscribers to add to its own 96 million; increase its spectrum capability by up to 30% in key major markets; significantly add to its cellphone tower assets, extending the company's reach; and save money by merging two complementary networks. The big question is whether regulators will accept this market solution to a government-created bottleneck or block the deal as anticompetitive. Cries of "duopoly" are already circulating around Washington, based solely on grounds that an enlarged AT&T and Verizon would control almost 80% of the market by subscribers. Gigi Sohn, president of the Naderite outfit Public Knowledge, dusted off the sheet music to claim the deal would lead to "higher prices, fewer choices, less innovation." Yet market share alone doesn't measure consumer benefit. As the industry has consolidated, wireless prices for U.S. consumers have declined while services have improved and data usage has soared—despite the government spectrum constraints. Bank of America Merrill Lynch analysts estimate that U.S. wireless telephony, at $0.04 of revenue per minute, is among the most affordable in the developed world. Cost savings from the AT&T deal would likely be passed on to the consumer, reducing prices further. The burden ought to be on Obama Administration regulators to show that the merger will harm consumers. The AT&T deal is also a message to fast-track federal spectrum auctions and liberalize private secondary sales. The goal of regulators should be to find more spectrum for wireless companies to use, not to stop them from acquiring it.

Lawmakers on both sides of Congress have responded cautiously to AT&T’s proposed $39bn acquisition of Deutsche Telekom’s US mobile phone business, as consumer groups worry about the effect the deal would have on household bills.

The US telecoms company’s plan to buy T-Mobile USA would reduce the number of large mobile network operators from four to three. Telecoms analysts said industry consolidation should provide the remaining mobile operators with greater pricing power and therefore higher profit margins. Although mobile customers may not see their bills rise after consolidation, reduced competition could slow the rate of industry price declines. AT&T, by purchasing T-Mobile USA for $39bn in cash and stock, would leapfrog Verizon Wireless to become the leading US mobile operator. The deal must first obtain clearance from the Department of Justice and the Federal Communications Commission, and the expected intense level of regulatory scrutiny means the transaction is not due to be completed until the first half of next year.

Federal Communications Commissioner (FCC) Mignon Clyburn says consumers are the key consideration in AT&T's merger with T-Mobile.

She's concerned about industry consolidation because it can mean higher prices, but that smaller companies can be at a disadvantage when it comes to the high costs of service such as erecting cell phone towers. She said she tends to look at alternatives, consumer interests and how users interact with a company. She said she’s looking at market concentration, but she also pointed to the utility industry as an example of why it sometimes makes sense to have fewer players in the market. “Competition is good,” she said. “But you also have to look at it industry by industry, transaction by transaction, to see if the consumer benefit outweighs any potential concern.”

AT&T officials might be "confident" that they can usher their merger with T-Mobile past federal regulators, but that doesn't mean a formidable set of opponents won't do everything in their power to stop it.

A diverse group of industry and public-interest figures is lining up to campaign against the proposed deal, which would create the nation’s largest wireless carrier. Advocacy sources predict a wall-to-wall lobbying campaign over the merger, featuring aggressive ad buys, events on Capitol Hill and the formation of a new coalition to try and scuttle it. Sprint has already begun articulating an argument against the deal and, long story short: the companies may have different doors open to them as they fight their way through the regulatory process. What's more, Sprint has close allies in Washington's consumer advocacy community — no stranger to war with AT&T. Sprint has worked with public interest groups on a range of issues, including special access, data roaming and the proposed D Block spectrum auction. Public Knowledge, Consumers Union, Free Press and the Media Access Project have already come out against the AT&T merger on the grounds that it is anticompetitive and could hurt consumers. The groups have sway with Democrats at the Federal Communications Commission and on Capitol Hill. Free Press and Public Knowledge have already begun email campaigns against the acquisition.