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FCC delays AT&T's Alltel buyout over fears it could leave prepaid customers behind

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Gallery Photo: AT&T's Chicago flagship store
Gallery Photo: AT&T's Chicago flagship store

The Federal Communications Commission has delayed approving AT&T's January purchase of Atlantic Tele-Network's (ATNI) Alltel retail operations while the companies hammer out plans to move over the subscriber base. In a statement, the FCC says it's stopping the clock on an informal 180-day review period, 175 days into the investigation. The problem, it says, is that it hasn't received details about how AT&T will help Alltel's prepaid customers move onto a new network, "despite several Commission staff follow-up conversations about the importance of transitioning prepaid customers."

AT&T agreed to pay $780 million to acquire spectrum, licenses, retail locations, and customers from ATNI's Alltel branch — which was itself spun off when Verizon acquired most of Alltel in 2008. AT&T already has a large part of the former business, and if this sale is approved, all its old assets will be in the hands of AT&T or Verizon. For subscribers on ATNI's Alltel, that means moving from a CDMA network to one based around GSM and LTE.

Based on the FCC's statement, AT&T seems to have laid out a roadmap for anyone on a contract-based postpaid plan. But of ATNI's 591,000 mobile customers, 182,000 are prepaid, and ATNI credited that segment with driving a small growth in total subscribers earlier this year. Fortunately for AT&T, the FCC hasn't expressed any larger problems with the deal in this statement: as soon as it has an explanation, it will restart the approval clock.

Update: AT&T has provided the below statement in response to the FCC's decision.

"AT&T is extremely disappointed at the FCC delay today on this small transaction. AT&T is ready, willing, and able to make significant network investments in these rural territories to bring HSPA+ and LTE services to Allied's customers, an investment that will not occur but for this transaction. AT&T has actively worked to address FCC concerns and will continue to work with the Commission until all issues are resolved."