FCC allows AT&T to withdraw application to purchase T-Mobile

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The Federal Communications Commission agreed to allow AT&T Inc. to withdraw its application for approval of its proposed $39-billion purchase of T-Mobile USA Inc.

The agency also potentially dealt a further blow to the teetering telecommunications deal by announcing Tuesday it would release a report detailing its staff findings that the purchase was not in the public interest.

FCC officials said the 109-page report, which would be posted on the FCC’s website later today, found that the combination of two of the nation’s largest wireless providers -- AT&T has the second-most subscribers and T-Mobile is fourth -- would harm competition and despite the company’s public claims would do little to expand high-speed Internet access and would not lead to more jobs.

The FCC staff analysis, which took six months and was based on more than 200,000 pages of documents, found that AT&T’s acquisition of T-Mobile would lead to job losses, agency officials said.

FCC Chairman Julius Genachowski signaled last week he opposed the deal when he moved to seek a hearing and review by an administrative law judge -- the steps the agency takes to oppose a transaction.

Afterward, AT&T and T-Mobile’s parent company, Deutsche Telekom AG of Germany, said Thursday they intended to withdraw their FCC application to focus on winning an antitrust suit filed by the Justice Department to block the deal.

Both the FCC and the Justice Department must approve the purchase. FCC officials said they will provide their staff analysis to Justice Department officials. If AT&T wins the suit or reaches a settlement, it can reapply for FCC approval. But the usual six-month review would start over from the beginning, FCC officials said.

AT&T objected to the planned release of the FCC report, which it said it has not had the opportunity to rebut.

‘This report is not an order of the FCC and has never been voted on,’ said Jim Cicconi, AT&T’s senior executive vice president for external and legislative affairs. ‘It is simply a staff draft that raises questions of fact that were to be addressed in an administrative hearing, a hearing which will not now take place. It has no force or effect under law, which raises questions as to why the FCC would choose to release it.’

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-- Jim Puzzanghera