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Cingular Wireless LLC and AT&T Wireless Services Inc. are urging regulators to approve their $41 billion combination, arguing it will bring new data services to consumers and enhance government communications during an emergency. “The public interest benefits of the transaction are straightforward and compelling,” AT&T Wireless and Cingular said in a recently released filing with the Federal Communications Commission. The two wireless telecommunications companies laid out their justification for the deal in a 12-part application, which included endorsements of the merger by academics and Cingular technology officials. The application will form the basis for the FCC to conclude if the combination serves the public interest. The agency, which began its formal review of the deal last Friday, is expected to complete its evaluation in early 2005. Telecom observers expect regulators to approve the deal, though they may require divestitures of customers and spectrum in some markets. The application was filed March 18, but it was not made public until late Friday. In the application, Cingular and AT&T Wireless said their combination provides the spectrum, network assets and investment capital necessary to offer new data services through so-called third-generation, or 3G, networks that are already widely available in Europe and Asia. Deploying 3G technology would take much longer if the deal was rejected, the companies said. They also said the merger will enable them to develop a universal mobile telecommunications system, or UMTS, which permits enhanced wireless broadband services. Neither company has sufficient spectrum to independently create a UMTS system, they said. Cingular and AT&T also asked the FCC to waive ownership restrictions in 11 rural markets within Connecticut, Florida, Oklahoma and Texas. Without the waivers, the combined company would be required to divest spectrum and customers. The agency in 1991 barred one company from owning both cellular and personal communications services spectrum, another wireless technology, in a rural market. The restriction was aimed at supporting the investments of new companies at the time, such as Sprint Corp., in burgeoning PCS technology. Without the cross-ownership ban, a few big cellular companies may have cornered the spectrum market in rural areas and thwarted fledgling PCS companies, said Carl Northrop, chairman of the wireless telecom practice at law firm Paul, Hastings, Janofsky & Walker LLP in Washington. But Cingular and AT&T argue that wireless communications services have changed in the subsequent 13 years. They contend that the industry has matured and now sustains enough healthy competitors in rural areas to justify consolidation in these markets. Many critics of the deal, including FCC Commissioner Michael Copps and Sen. Ernest Hollings, D-S.C., argue that wireless industry mergers reduce consumer choice. The Cingular deal would reduce the number of national cell-phone companies from six to five. Privately held Cingular, the No. 2 U.S. cell-phone company, is jointly owned by BellSouth Corp. of Atlanta, with a 40 percent stake, and SBC Communications Inc. of San Antonio, which has a 60 percent stake. The deal, which was announced in February, would give the enlarged company more than 45 million subscribers, surpassing Verizon Wireless as the country’s biggest cell-phone service provider. �Copyright 2004, The Deal, LLC. All rights reserved.

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