Obviously. Though it’s interesting to hear an FCC official say that on the record. During an appearance at CTIA earlier this week, FCC Chair Julius Genachowski declined comment on the deal, which is burdened by all sorts of competitive concerns.

AT&T, which has been spinning the acquisition as a boon for Americans and their country, says it’s confident it will win approval. “We understand that Congress, the DOJ, the FCC, as well as wireless consumers will have questions about the transaction. We look forward to answering and addressing those questions,” said a company spokesman. “We are confident that the facts will demonstrate that the deal is in the public interest and that competition will continue to flourish.”

I hope so. AT&T stands to lose $3 billion if the deal falls through.

Bernstein Research analyst Craig Moffet calls the deal a “clear win” for AT&T, despite T-Mobile USA’s high price tag. “Even paying a premium to market for T-Mo, AT&T believes it can acquire the asset for free,” he writes. “The relative compatibility of the two companies suggests that very high synergies in this range are, in fact, plausible. The company can point to synergies in the areas of network, advertising and marketing, retail stores, support and SG&A, and spectrum.”

At Barclays, James Ratcliffe also describes the deal as a win, but worries about regulatory challenges. “While we don’t expect this deal to have an easy time getting approval in Washington, AT&T’s offer to expand its LTE coverage (feeding into administration goals of nationwide wireless broadband) and support from AT&T’s unions (T-Mobile is non-union), certainly help,” he says. “AT&T’s regulatory team is high-quality, and we don’t think the company would be going down this path (given $3BN breakup fee, especially), if they didn’t have high confidence of success.”

Simon Flannery at Morgan Stanley, too, sees the acquisition as a good move. “The AT&T/T-Mobile USA merger fits our thesis of logical combinations, with synergy opportunities and a common network technology,” he told clients this morning. “The deal would increase AT&T’s wireless revenues by 36.4 percent bringing wireless to 55 percent of consolidated revenues versus 47 percent currently. It would also raise AT&T to the number one place in terms of subscribers, revenue and EBITDA. Importantly, from a spectrum standpoint, the deal relieves significant pressure off AT&T.”

Over at BTIG Walter Piecyk applauds the deal for similar reasons. “[It] solves AT&T’s longer term spectrum issues,” he says. “It also eliminates a price aggressive competitor and blocks Sprint from merging with TMO.”

And Piper Jaffray’s Christopher Larsen states the obvious, saying the merger will make AT&T a more formidable competitor. “First, all of the carriers have been feeding off of T-Mobile’s subscriber base due to its lack of differentiated service,” he writes. “AT&T’s market position and reputation should help stem subscriber defections over the long-term (there could be some losses early due to merger-related distractions or forced divestitures). Second, the combination should allow AT&T to accelerate its 4G network build. Finally, AT&T’s new spectrum position gives it an opportunity to build the premier wireless network in the nation, as it relates to quality and capacity.”

At Oppenheimer, Tim Horan praises it as a wise strategic move, noting that it undermines a potential Verizon-Sprint deal. “In our view, from AT&T’s perspective, this is a smart time to come to an agreement of this magnitude and we believe the deal should be approved by regulators,” he writes. “By taking the strategic initiative, we believe [the carrier] is precluding other major deals from taking place.”

Consensus, then, seems to be that the deal is a savvy one which brings serious scale benefits and synergies–if AT&T can win the necessary regulatory approvals.

More Coverage

• AT&T Wraps Self in Flag, Says T-Mobile Deal Essential to U.S. Competitiveness
• The AT&Terminator: Rise of Ma Bell
• Sprint: AT&T’s T-Mobile Buy Would “Dramatically Alter” Market
• First Casualty of AT&T Deal: T-Mobile Drops From CTIA Panel
• What AT&T Owes T-Mobile if Deal Doesn’t Go Through
• T-Mobile USA: No, We’re Not Getting the iPhone Yet
• T-Mobile’s Memo to Staff on the AT&T Deal
• AT&T’s President on Why T-Mobile Deal Should Pass Muster and Won’t be a Customer Nightmare
• T-Mobile: We Were Totally Kidding About AT&T’s Crappy Network!
• AT&T Agrees to Acquire T-Mobile USA for $39 Billion

Such morally admirable altruism and patriotism. But few, it seems, are buying it. On Sunday afternoon Sen. John Rockefeller (D-W.Va.), chairman of the Commerce Committee, urged “both the Department of Justice and the FCC leave no stone unturned in determining what the impact of this combination is on the American people.” A few hours later, Sen. Herb Kohl (D-Wisc.), chairman of the Senate Antitrust, Competition Policy and Consumer Rights Subcommittee, promised a hearing on the deal. “The explosion of cell phone usage – especially smartphones – makes competition in this market more important than ever as a check on prices, consumer choice, and service,” Kohl said in a statement. “That’s why the Antitrust Subcommittee will take a close look at what this loss of competition will mean for people who increasingly rely on wireless phone service to connect to friends, family and the Internet.”

Consumer groups echoed those concerns, with Public Knowledge president Gigi Sohn calling the combination of America’s second-largest wireless carrier with the fourth-largest “unthinkable” and Bert Foer, president of the American Antitrust Institute, reminding us of AT&T’s monopolistic past. “AT&T was broken up and now it’s back with a vengeance,” he said. “We have to decide if we’re happy with the idea of going back to monopolistic treatment of the telecom industry. AT&T has come back to monopolistic power just like the Terminator.”

A colorful analogy and one which I’m sure will irk AT&T to no end. But Foer’s point is well taken. The wireless business is becoming more concentrated; the Federal Communications Commission said as much in its last Mobile Wireless Competition report. “One widely-used measure of industry concentration indicates that concentration has increased 32 percent since 2003 and 6.5 percent in the most recent year for which data is available,” the agency concluded.

Thing is, the FCC didn’t say that there wasn’t effective competition in the market. Which is perhaps why AT&T seems so confident it will get regulatory approval for the deal. “This is probably the most fiercely competitive wireless market in the world,” AT&T CEO Randall Stephenson told The Wall Street Journal. “The majority of Americans have the option of five different wireless carriers.”

Complete Coverage:

• AT&T Wraps Self in Flag, Says T-Mobile Deal Essential to U.S. Competitiveness
• The AT&Terminator: Rise of Ma Bell
• Sprint: AT&T’s T-Mobile Buy Would “Dramatically Alter” Market
• First Casualty of AT&T Deal: T-Mobile Drops From CTIA Panel
• What AT&T Owes T-Mobile if Deal Doesn’t Go Through
• T-Mobile USA: No, We’re Not Getting the iPhone Yet
• T-Mobile’s Memo to Staff on the AT&T Deal
• AT&T’s President on Why T-Mobile Deal Should Pass Muster and Won’t be a Customer Nightmare
• T-Mobile: We Were Totally Kidding About AT&T’s Crappy Network!
• AT&T Agrees to Acquire T-Mobile USA for $39 Billion

ITA Software maintains a database of flight information, including fare comparison and flight schedules, for many major U.S. airlines, including American and United Airlines. Companies such as Kayak.com and Expedia.com are opposing the merger because they claim it will stifle competition.

Google maintains that it is only trying to improve travel-related search since it is among its highest-volume queries. Its goal will be to refer people quickly to a site where they can actually purchase flights–and it doesn’t have plans to sell flights itself, according to a site that answers questions about the deal.

But the American Antitrust Institute’s concerns are more complex than whether Google is buying ITA to compete with online travel agencies.

It says the merger warrants a deep look because a deal of this nature will strain the boundaries of antitrust analysis and raise First Amendment questions as the government participates in decisions about the prioritization of information reaching the public.

In a release today, the non-profit explains: “Maintaining competitive markets for both general and niche search may be the only alternative, ultimately, to an unregulatable monopoly. It is therefore appropriate for the Division, employing a statute intended to stop monopoly in its incipiency, to work within a public vision of longer-term developments and to place the present acquisition within such a context.”

It’s not the first group to come out against the deal. FairSearch.org has been particularly active, and Missouri Attorney General Chris Koster, who chairs the antitrust committee of the National Association of Attorneys General, questions whether the deal would hamper competition in the online travel market.

FairSearch.org produced this video to explain why a merger should not take place:

Google Buys ITA – A Travel Story from FairSearch.org on Vimeo.

And here’s a video from Google:

In January, the Korean Federal Trade Commission produced a 133-page public version of its findings against Intel, which it announced last June without providing many specifics. A Korean-speaking research fellow working with a non-profit advocacy group, the American Antitrust Institute, subsequently produced a 15-page translation of sections of the bigger document (which was noted this week by the Inquirer).

The excerpts lay out a series of carrots and sticks that Intel allegedly offered Samsung Electronics Co. and Sambo Computer–-two big PC makers in Korea–-to reduce chip purchases from rival Advanced Micro Devices Inc. (AMD) and keep Intel as their main supplier. For example, the document suggests that Intel withheld rebates from Samsung in 2002 to punish it from starting to use AMD chips, later coming up with a more attractive collection of incentives that eventually led Samsung to curtail purchases from AMD.

Read the rest of this post

In a white paper published Tuesday, the Institute decried the deal as one that “could end up as a black hole that swallows up Yahoo, despite Yahoo’s intentions to stay in the business.”

Apparently, it doesn’t quite buy Google’s claims of altruisim. The company wants only to aid a floundering ally? Really?

“It strains credulity … to believe that Google would agree to an arrangement that gives its chief rival $800 million to invest in efforts that would, if successful, reduce Google’s market power,” the AAI wrote in its white paper. “… The agreement between Google and Yahoo is not a merger, of course, but serious concerns have been raised that the agreement will effectively result over time in Google’s acquisition of all or at least a substantial part of Yahoo’s paid search business.”

Still, the agreement could just as easily not do that. Said the AAI, “It is possible that the transaction will throw off sufficient revenue for Yahoo to not only protect its core business during difficult economic times but to underwrite its plans to become a stronger competitor than it now is.”

So, Google (GOOG) is either a friendly shoulder on which Yahoo (YHOO) can steady itself or a vast rainbow-colored black hole waiting to engulf it. Given that either-or, what to do?

Says the AAI: “The government should insist on a consent decree which preserves Yahoo’s incentives to remain in the paid search market. If such a consent decree cannot be achieved, then the government should seek an injunction to prevent Google and Yahoo from implementing their agreement.”

With more critics piling on to the just-say-no-to-Yahoogle bandwagon–questioning the controversial ad deal for Yahoo to outsource some of its search ads to Google–sources said some top Google execs are now hightailing it to Washington, D.C., to smooth over any regulatory feathers the company might have ruffled with its aggressive, damn-the-torpedoes approach to pushing the deal forward.

The partnership is set to start up around Oct. 13 and promises to give the much-suffering Yahoo (YHOO) a huge boost in revenues.

Google (GOOG), of course, benefits by blocking Microsoft (MSFT), which has caused the software giant to lobby against the deal like a lipstick-wearing pitbull.

Google and Microsoft have been locked in a variety of tech battles on many fronts of late, but the Yahoo front has been a particularly rough one.

Critics like Microsoft have a lot of ammo here though, especially because Yahoo and Google together will claim over 80 percent of the search market.

That has caused a big outcry to prevent the No. 1 and No. 2 players from partnering.

The latest objection, among a passel of them, came earlier this week from the World Federation of Advertisers, which has asked the European Commission to stop the partnership, even though the deal, as currently conceived, impacts only U.S. Web sites.

So to assuage the tumult, Google is glad-handing regulators, even as Yahoo announced a new group for advertisers called the Digital Advisory Council.

“Opening up Yahoo! is a key part of our strategy, and we want to help advertisers understand how they can benefit from this approach,” said Yahoo U.S. EVP Hilary Schneider. “At the same time, there has been confusion and misinformation surrounding Yahoo!’s agreement with Google, which represents another key milestone in opening up our network. As questions emerge about how Yahoo! will implement this agreement, the Advisory Council will provide a forum for us to engage in a dialogue with key customers on those issues.”

Well, phew! A council! That’s sure to bring online ad harmony across the planet!

Actually, it all feels like that model United Nations thing I grudgingly did in high school, and almost as useful.

And the pair also got a boost from New York Times Digital Domain columnist Randall Stross, who penned a piece Sunday called “Why the Google-Yahoo Ad Deal Is Nothing to Fear.”

Nothing? Really? Not even a little bit?

BoomTown has got to say, we’re still a smidgen nervous. OK, tons and tons. (And, it turns out TechCrunch’s Michael Arrington agrees with me, so you know it is serious!)

Still, in the interest of fairness, let’s examine Stross’s main argument, which is essentially that Google’s and Yahoo’s more than 80 percent market share does not matter.

“Google controls about 70 percent of the search advertising market. Doesn’t that give it a monopolist’s ability to set prices as high as it wishes?

“It does not. Google does not set the prices. Its advertisers do, bidding against one another for the amount they will pay when a user clicks on one of their ads. They do the same for ads on Yahoo and Microsoft search sites, too.”

Noting Microsoft’s efforts to portray Google as a “price-controlling monster,” Stross then tried to make a case that worries about higher prices are currently just speculation and not based in practice.

“Even though this is a business based on auction pricing, the specter of price fixing has been raised by demagogues. Shout ‘monopoly’ loud enough and point to ’90 percent share’ of something–it doesn’t really matter what–and federal and state regulators will decide this is a matter meriting their close attention.

“One company has done more than any other to publicly disparage the Yahoo-Google deal: Microsoft, the same company that did not succeed in acquiring Yahoo earlier this year. Hell hath no fury like a suitor scorned.”

Oh dear, the loser-boyfriend argument, which is a canard.

Sure, Microsoft is up to all sorts of tricks and aggressive lobbying about the deal–just as Google surely would be if the tables were turned and Microsoft had won the heart of Yahoo CEO Jerry Yang and consummated a merger marriage.

And Google and Yahoo are correct that the auction model means advertisers set prices for ads.

But what Stross is leaving out is the key problem of what happens later, when perhaps Yahoo’s share of the search market declines even further–as is the inexorable trend–and Yahoo becomes yet another vassal of Google’s largess.

That’s now true for AOL, Ask, MySpace and many others. And it is in no one’s interest–especially publishers–to have just one place to turn, which is what they will have, since Google will increasingly yield the best results.

Last week, for example, I was meeting with a big advertiser on both Google and Yahoo, who noted that he liked to have two strong choices.

“In the end, as Yahoo’s results weaken, it will probably only make sense to use Google,” he said. “And that opens up a whole can of worms.”

Indeed. Which is why–at the very least–regulators should force Google and Yahoo to make some commitments about their deal.

The kind of trust-but-verify-later requirements that anticipate possible problems was well argued in the form of a white paper yesterday from a nonprofit think tank called the American Antitrust Institute.

The report was relatively even-handed, noting, “the transaction should be viewed as presumptively anticompetitive, although it may also contain possible pro-competitive benefits.”

So, in the interests of consumer and advertisers and publishers, it is incumbent on the government to get tweaks to the Yahoogle deal that minimize the former and maximize the latter.

Without such promises, who knows what tomorrow brings in a world in which one search engine survives?

Please see this disclosure related to me and Google.