FCC Will Not Bless AT&T/T-Mobile, Asks For Hearing On Merger

The U.S. Federal Communications Commission does not like what it sees in the proposed mega-merger between AT&T (NYSE: T) and T-Mobile. It has recommended that the merger undergo further scrutiny before an administrative law judge, saying that AT&T’s reasons for the merger don’t always add up.

During a media call Tuesday afternoon FCC representatives (who insisted on remaining anonymous) said that Chairman Julius Genachowski has asked fellow commissioners to review a proposal that the merger be subject to a hearing after finding aspects of the proposed deal that don’t line up with the public interest. One representative called the merger a unique concentration in market power in almost every single one of the top 100 local markets in the U.S., and also said that AT&T’s claims that the merger will allow more Americans access to 4G wireless (AT&T’s primary selling point) and create new jobs did not hold water.

The FCC will have to get in line behind the Department of Justice, however, which also plans to challenge the deal. Sprint (NYSE: S) has also filed an antitrust lawsuit against AT&T. The other commissioners at the FCC will have to approve Genachowski’s order before it can proceed.

When reviewing a transaction, FCC commissioners can approve the deal, approve it with conditions (which it did during the same hearing with AT&T and Qualcomm’s proposed spectrum deal), or recommend that it be scrutinized in a hearing, the representatives said. The EchoStar/DirecTV (NYSE: DTV) merger was the last big merger that fell into the FCC’s domain that was referred to a judge, they said.

In any event, the further review will likely delay even further AT&T’s chances of wrapping up this deal in a timely fashion. The DOJ trial is scheduled for February.