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California regulators to investigate AT&T buyout of T-Mobile

updated 03:15 pm EDT, Fri May 27, 2011

Follow New York into state-level review

California has become the second major state to formally move towards investigating AT&T's proposed acquisition of T-Mobile. On Thursday, the California Public Utilities Commission began preparing a proposal for assessing the $39 billion deal. Its move might raise challenges to the deal beyond what the Department of Justice and FCC will offer as part of their formal investigations.

The CPUC investigation wouldn't be alone. In March, the New York Attorney General announced that he would review the proposed merger. Number three cellular provider Sprint, whose CEO Dan Hesse testified before Congress earlier this month is actively encouraging other states, including West Virginia, to conduct their own investigations.

Hesse also warned that with so much market control in the hands of both a post-merger AT&T and Verizon, which he referred to as the "two Bells," Sprint might be forced to sell itself in order to remain competitive. Smaller wireless providers including MetroPCS and Leap have also expressed strong concerns over the anti-competitive impact of the AT&T and T-Mobile merger.

AT&T has argued that the merger would not hurt competition, but would in fact stimulate job growth, and encourage expansion of wireless coverage to more rural parts of the US.

The California Commission is expected to hear the proposal on June 9. [via Wall Street Journal]

by MacNN Staff



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