The review of a proposed transaction entails a thorough examination of the potential public interest harms and any verifiable, transaction-specific benefits, including any voluntary commitments made by the Applicants to further the public interest. As part of this process, we may impose additional remedial conditions to address potential harms likely to result from the proposed transaction or to help ensure the realization of any promised potential benefits.
As described above, under our sliding-scale approach we cannot conclude based on this record that the potential benefits are sufficiently large, specific, and imminent to outweigh these potential harms. We find that the transaction as proposed has the potential to cause some competitive and other public interest harms in several local markets, as well as to value-conscious consumers generally. Moreover, although we find some potential public interest benefits likely to arise from the transaction in terms of spectral efficiency, these potential benefits by themselves are insufficient to outweigh the potential harms.
In recent filings supplementing the record on some key issues, however, AT&T has made several voluntary commitments, which as explained below allow us to find that the proposed transaction overall would be in the public interest.1 AT&T has agreed to file quarterly reports detailing its progress in complying with these voluntary commitments. Those commitments include spectrum divestitures in certain markets, where we have found the potential for spectrum aggregation to lead to anticompetitive harm. These divestitures will help ensure that AT&T’s competitors have access to sufficient spectrum in those markets. AT&T also is committing to deploy LTE service using unused Leap spectrum within 90 days or 12 months of closing, including some markets in south Texas. This deployment will ensure that this spectrum will not lie fallow and will help to ensure that consumers in current Leap service areas will benefit from network improvements to AT&T’s advanced 4G network technologies. AT&T also will build out LTE service on its network in 70 percent or 80 percent of the geographic area in specific markets in south Texas within 18 months of closing. This will ensure that consumers in those markets have access to advanced 4G LTE services.
In addition, AT&T will be offering certain rate plans targeted to help value-conscious and Lifeline customers, which will provide additional assurance that AT&T will compete vigorously for value-conscious customers and will be attractive to Leap customers who may wish to migrate to AT&T’s network. To deal with issues affecting Leap prepaid customers wanting to migrate onto AT&T’s GSM-based network, AT&T will be offering a device trade-in credit program and a feature phone device trade-in program to certain groups of Leap customers prior to discontinuing CDMA service in a particular area. These commitments will help ensure that Leap customers have future access to wireless service and will facilitate the migration of Leap’s customers to the AT&T network. To address the CDMA roaming issues discussed above, AT&T is committing to honor the rates, terms and conditions of the CDMA roaming agreements that AT&T is assuming from Leap, and to offer CDMA voice and data roaming consistent with applicable Commission roaming rules for so long as AT&T operates Leap’s CDMA network. This should facilitate the provision of roaming services during the network transition. Finally, on the Flat Wireless issues, AT&T is committing that, to the extent the AT&T/Leap transaction is consummated prior to Cricket’s sale of its interest in Flat, it will use reasonable best efforts to cause Cricket to sell its interest in Flat as soon as practicable thereafter and will take certain steps detailed below in the meantime to ensure that AT&T does not participate in the affairs of a competitor.
As discussed in detail below, we find that in light of these commitments, which become conditions to our approval, the public interest benefits of the proposed transaction outweigh the likelihood of significant public interest harms, such that overall, the proposed transaction is in the public interest. For example, we note that the commitments providing for spectrum divestitures, the deployment of unused spectrum, the build out of LTE service, rate plans, and customer migration will all apply to the south Texas markets that are of particular concern. They will ameliorate the potential harms and ensure public interest benefits in those markets by, among other things, ensuring that AT&T has every incentive to provide higher quality service, and minimizing customer dislocations that might result from the proposed transaction.
We also find that each of the commitments AT&T has made is necessary in order to address potential harms from the proposed transaction.2 Without these commitments, we would be unable to conclude that the benefits of the transaction outweigh the harms. We therefore impose each of the commitments made by AT&T as conditions of our consent to the proposed transaction.
Record. We have found above that the proposed transaction would be likely to cause significant competitive harm as a result of spectrum aggregation in a number of geographic markets. Specifically, we have concluded that, in those markets, there is a significant potential that AT&T would have the ability to foreclose or significantly raise rivals’ costs.
AT&T has made a commitment that, within 6 months of the transaction closing, AT&T will file applications with the Commission to assign or transfer control of the amounts of spectrum (“Divestiture Assets”) in the geographic areas identified in Attachment B.3 AT&T reserves the right, upon notice to the Bureau, to change the specific type of spectrum to be divested in any geographic area based on further analysis performed after the merger’s close.4 Upon application by the Applicants to the Bureau, the Bureau may grant one or more extensions not to exceed 60 days in the aggregate to allow the Applicants further time to dispose of the Divestiture Assets.5 To the extent the Applications are not filed by the relevant date, or by any extended date allowed by the Bureau, the Commission may require AT&T to surrender the designated spectrum.6
Discussion. We conclude generally that these spectrum divestitures will adequately prevent AT&T from foreclosing competing service providers in those markets based on undue spectrum aggregation. With respect to Youghiogheny Communications’ request to require divestiture in south Texas, we have carefully reviewed each of those markets and find that the spectrum divestitures offered by AT&T will mitigate competitive harm.