Powell contends the FCC's Spectrum Policy Task Force -- which he created -- has moved the nation "strongly towards greater flexibility and freedom" for users of licensed spectrum.

"From the tremendous flexibility, we have decided to grant 3G licensees to our sweeping secondary markets initiative -- which allows spectrum to change hands with minimal government involvement -- these policies are just beginning to bear fruit," he said. "We must continue to grant additional flexibility in other bands and further encourage secondary markets."

Does that sound like a man who is about to turn thumbs down on a merger that would create the largest -- and, arguably, most economically efficient --wireless service provider in America? TPR thinks not.

Consumer Advocates Forge Ahead

But our rationale isn't slowing efforts by the Consumer Federation of America (CFA) and Consumers Union (CU), publisher of Consumer Reports magazine, in pressing the FCC for rejection of the proposed AT&T Wireless-Cingular merger.

"Consumer groups have relied upon the data submitted by the merging parties ... and find that both local and national wireless markets would suffer from the level of consolidation proposed in this transaction," the two groups told the FCC. They contend the merger will result in enormous local concentration both of spectrum and subscribers. "It is an anti-competitive spectrum grab that will be rewarding vastly inefficient companies for their bad stewardship of spectrum," CFA and CU said.

The merger proposes "an unacceptable level of concentration at the national level, clearly in violation of federal merger guidelines," the consumer groups argue. "But the anti-competitive effects this merger will have on local markets is of even greater concern," they told the FCC. "Cingular and AT&T Wireless are the second- and third-largest carriers nationally, but in many local markets where Cingular's parent companies [SBC and BellSouth] are the monopoly landline telephone providers, these companies are the No. 1 and No. 2 players -- a combination that proper antitrust scrutiny would surely block."

Those are some mighty tough words, especially the reference to "proper antitrust scrutiny." By implication, anything other than a denial of the merger would be a result of "improper" antitrust scrutiny.

Approval Seems A Foregone Conclusion

In TPR's view, it is highly unlikely the commission will be any tougher on the merger proposal than antitrust officials at the Department of Justice (DOJ). The DOJ's Antitrust Division can be expected to initiate its probe with an analysis of the relevant products (., services) and affected geographic markets. DOJ in the past has defined the market for such mergers as the market for "wireless mobile telephone service." Justice defines the relevant geographic market for wireless mergers as "each overlapping wireless market," meaning each local market in which both the acquiring and the acquired carriers provide services.

After the DOJ has defined the relevant markets, it will apply a basic antitrust test to determine whether the proposed merger, if allowed to go forward, would heighten market concentration in the relevant geographic and product markets beyond an acceptable level. Antitrust officials use something known as the "Herfindahl-Hirshman Index" (HHI) to calculate market concentration before and after a proposed merger. Using a complex mathematical formula, the HHI increases both as the number of firms in the market decreases and as the disparity in size between them increases.

The DOJ considers markets in which the HHI is between 1,000 and 1,800 points to be "moderately concentrated." Markets in which the HHI is higher than 1,800 are seen as "highly concentrated." Mergers that hike the HHI by more than 100 points in moderately concentrated markets, and by more than 50 points in highly concentrated markets, usually spur concerns about potential antitrust problems.

In all probability, the application of the HHI to the Cingular-AT&T Wireless merger proposal will produce an unusually high figure, but not one that is likely to result in a DOJ determination of a "highly concentrated" market. Data released by the DOJ late last year underscores that point. It shows that the Department often permits deals to go forward even if they exceed levels that normally trigger antitrust concerns. In fact, the DOJ data indicate that at least 87 percent of the time, deals in which the concentration index hit the 2,500 mark remained virtually unchallenged.

And even if a negative HHI result does emerge, there are a number of arguments the merging parties could pose in justifying the deal. First and foremost, they could say that the efficiency gains resulting from the merger outweigh any concerns about loss of competition. The merger combines spectrum that enables new or better services, such as more reliable substitutes to landline service or faster mobile data service.

Now, that's an argument certain to please Michael Powell.