FCC's New Merger Review Process Benefits Wireless Tie-Ups

The new merger review process adopted by the Federal Communications Commission appears to benefit consolidations in the wireless segment, with FCC Chairman Ajit Pai recently providing a statement describing the agency's latest move as an attempt to "clarify" a number of procedures that have been employed by the regulator in the past when probing tie-up proposals. Pai's wording suggests the Republican majority of Commissioners doesn't see the decision as leading to new rules but a more transparent version of the existing framework, with Democratic Commissioners arguing against that notion and claiming that the new process ignores precedents and traditional methods of reviewing merger attempts on a case-by-case basis.

The move itself was meant to be illustrated by the proposed consolidation of wireline broadband companies Level 3 Communications and CenturyLink wherein the former is acquiring the latter for $34 billion. Pai's statement on the matter explained that the FCC approved the merger after having the two companies agree to certain concessions meant to prevent any potential negative effects on things of public interest. In this particular scenario, the FCC mandated CenturyLink to divest certain units of Level 3 Communications in areas where the merger would create a monopoly. Pai was quick to point out that all concessions required from the firms were in the public's best interest and not meant to further another agenda, noting how the FCC will strive to stick with such principles going forward.

Some industry watchers are expecting the revised process to benefit any wireless consolidation proposals in the future as it's more likely to approve such deals even if it attempts to limit their scope to a degree before greenlighting them. While the potential merger of T-Mobile and Sprint is reportedly close to falling apart, tie-ups between mobile service providers and cable companies may also be facilitated following the move as they too fall under the FCC's jurisdiction. Opponents of the FCC's current leadership are claiming that its newly revised review standards are still too friendly toward big businesses who are more concerned about their bottom lines than the well-being of consumers, adding that their consolidation attempts shouldn't be made easier than they already are.

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