In re Applications of At&T Inc.

• Decision Date: 05 November 2009
• Docket Number: WT 08-246
• Court: Federal Communications Commission Decisions
• Parties: In the Matter of Applications of AT&T Inc. and Centennial Communications Corp. For Consent to Transfer Control of Licenses, Authorizations, and Spectrum Leasing Arrangements

In the Matter of Applications of AT&T Inc. and Centennial Communications Corp. For Consent to Transfer Control of Licenses, Authorizations, and Spectrum Leasing Arrangements

WT No. 08-246

Federal Communications Commission

November 5, 2009

Adopted: November 5, 2009

File Nos. 0003652447, ITC-T/C-20081121-00508, and SCL- T/C-20081121-00018

MEMORANDUM OPINION AND ORDER

By the Commission: Commissioner Copps concurring and issuing a statement.

TABLE OF CONTENTS

Heading/Paragraph #

I. INTRODUCTION .................................................................................................................................. 1

II.BACKGROUND .................................................................................................................................... 3

A. Description of Applicants ................................................................................................................ 3

1. AT&T Inc. . ................................................................................................................................ 3

2. Centennial Communications Corp ............................................................................................. 8

B. Description of Transaction ............................................................................................................. 12

C. Transaction Review Process .......................................................................................................... 15

1. Commission Review ................................................................................................................ 15

2. Department of Justice Review ................................................................................................. 23

III. STANDARD OF REVIEW AND PUBLIC INTEREST FRAMEWORK .......................................... 27

IV. QUALIFICATIONS OF APPLICANTS ...................................................................................... 31

V. COMPETITIVE ANALYSIS .......................................................................................................... 34

A. Market Definitions ................................................................................................................... 36

1. Product Market ........................................................................................................................ 37

2. Geographic Market .................................................................................................................. 38

3. Input Market for Spectrum ...................................................................................................... 43

4. Market Participants .................................................................................................................. 45

B. Initial Screen ............................................................................................................................ 46

C. Horizontal Issues .................................................................................................................... 52

1. Unilateral Effects ..................................................................................................................... 54

2. Coordinated Effects ................................................................................................................. 59

D. Market-by-Market Analysis .................................................................................................... 75

1. Analytical Standard ................................................................................................................. 75

2. Results of Market-Specific Analysis ....................................................................................... 76

VI.POTENTIAL PUBLIC INTEREST BENEFITS ..................................................................... 87

A. Analytical Framework ............................................................................................................ 89

B. Discussion ............................................................................................................................. 92

1. Expanded and Improved Services and Features ...................................................................... 93

2. Improved Disaster Preparedness ........................................................................................... 105

3. Substantial Additional Cost Synergies .................................................................................. 106

4. Puerto Rico Wireline Service Benefits .................................................................................. 107

C. Conclusion ......................................................................................................................... 108

VII.DIVESTITURE OF MARKETS ........................................................................................... 109

A. Operating Unit Divestitures ..................................................................................................... 111

B. Operation of Divestitures ......................................................................................................... 112

VIII. OTHER ISSUES .................................................................................................................... 120

A. Roaming ................................................................................................................................... 120

B. Handset Availability and Exclusive Handset Agreements ........................................................... 139

C. Customer Transition Matters ....................................................................................................... 142

D. NEATT Objections ................................................................................................................... 147

E. Cellular South Objection Regarding Mississippi 8 ...................................................................... 151

F. Ex-Parte Status of Proceeding ..................................................................................................... 153

IX. CONDITIONS IN ADDITION TO MARKET DIVESTITURES ................................................... 158

X. CONCLUSION ............................................................................................................................. 166

XI.ORDERING CLAUSES ................................................................................................................ 167

APPENDIX A – Applications Granted

APPENDIX B – Petitioners and Commenters

APPENDIX C – AT&T Letter of Commitment

I. INTRODUCTION

1. We grant today the applications of AT&T Inc. ("AT&T") and Centennial Communications Corp. ("Centennial") (together, the "Applicants")^[1] to transfer control of the licenses, authorizations, and spectrum leasing arrangements held by Centennial and its subsidiaries to AT&T, subject to the divestiture of certain markets and the imposition of conditions embodying certain voluntary commitments made by AT&T. Our conditioned grant is pursuant to Sections 214(a) and 310(d) of the Communications Act and Section 2 of the Cable Landing License Act, ^[2] under which we must determine whether approval of the Applicants' proposed transaction would serve the public interest, convenience, and necessity.

2. As discussed in detail below, the proposed transaction raises competition issues because it would result in the combination of overlapping AT&T and Centennial mobile communications coverage and services in various local areas. We find that competitive harm is unlikely in most of the overlap markets, primarily because multiple other service providers currently in these markets would be an effective competitive constraint on the behavior of the merged entity. However, with regard to seven local areas – six in Louisiana and one in Mississippi – our analysis indicates that, absent a remedy, competitive harms would likely result. Accordingly, we require divestiture of Centennial's wireless operations in these areas, which also are markets where the U.S. Department of Justice required divestitures in its review of the transaction. Moreover, in order to address additional competitive concerns, we accept several voluntary commitments made by AT&T and impose those commitments as conditions of our approval. These voluntary commitments encompass certain roaming obligations, including obligations to honor Centennial's existing agreements and to permit providers with fewer than 10 million subscribers to retain a Centennial roaming agreement for four years, or the length of the agreement, whichever is longer. We also accept AT&T's commitment to certain limitations with respect to its participation on the Board of Directors of, and services provided to, América Móvil, S.A.B. de C.V. ("América Móvil"), including restrictions on its participation in the business and operations of América Móvil in the United States (including Puerto Rico and the U.S. Virgin Islands). América Móvil, AT&T, and Centennial currently compete in the provision of wireless services in Puerto Rico and the U.S. Virgin Islands.

II. BACKGROUND

A. Description of Applicants

1. AT&T Inc.

3. AT&T, incorporated in Delaware and headquartered in Dallas, Texas, is a communications holding company.^[3] With its subsidiaries, affiliates, and operating companies AT&T states that it ranks among the leading providers of telecommunications services in the United States and around the world.^[4] AT&T asserts that, as of December 31, 2008, it was a leading provider of wireless data in the U.S. wireless industry based on subscribers^[5] and the largest communications company in the world by...