California PUC votes to scrutinize AT&T’s proposed purchase of T-Mobile USA

Reporting from Sacramento — In a split vote, state regulators decided to scrutinize AT&T Inc.’s proposed $39-billion purchase of T-Mobile USA to make sure that the deal is good for California’s consumers and its economy.

The California Public Utilities Commission’s approval Thursday marked a major departure from the commission’s 16-year policy of taking a hands-off attitude toward the wireless industry.

The commission wants detailed information about whether the request to consolidate much of the state’s cellphone and wireless broadband business might limit competition, giving control of nearly four-fifths of the market to just two companies — AT&T and Verizon Wireless.

Some of the data will be collected in a series of public hearings to be held in Los Angeles, San Francisco, the Silicon Valley, Orange County and the Central Valley.

The 3-2 vote was “a big win for consumers,” said Bill Nusbaum, a lawyer with the Utility Reform Network, which advocates for telephone and power utility customers.

The majority — three members appointed this year by Democratic Gov. Jerry Brown — also defeated a less stringent alternative proposal by commission President Michael Peevey, who was appointed by former Gov. Gray Davis, a Democrat, and reappointed by former Republican Gov. Arnold Schwarzenegger.

Nusbaum said his group was “gratified” that the commission would engage in a “rigorous, data-driven analysis” on the effect the proposed purchase would have on competition, service quality, pricing and other issues.

The findings from the California investigation will be submitted in October to the Federal Communications Commission, which will vote on the deal if the Justice Department clears it of antitrust concerns.

But the California investigation will have a bigger mission, said Commissioner Catherine Sandoval, a Santa Clara University law professor and former FCC staff attorney.

The state Legislature gave the PUC power to regulate intrastate phone service, including the land lines that provide much of the backbone that carries cellphone calls between wireless communications towers, she said.

“Only this body can determine how this measure affects California consumers,” she said. “Our analysis will give the public an opportunity to determine if this serves competition and the public interest.”

Any thorough analysis should show that the proposed acquisition would benefit California by fostering technical innovation and improving service quality and coverage areas, AT&T contended.

Robert Quinn, AT&T’s senior vice president for federal regulatory affairs, said the company was confident that the PUC would not try to block the deal or even impose conditions.

“Once they see the benefits that this transaction is going to have to the citizens of California, I don’t think we’re going to be in a position where we’re talking about imposing conditions,” Quinn said.

marc.lifsher@latimes.com

Times staff writer Jim Puzzanghera in Washington contributed to this report.