TheWrap.com : AT&T, T-Mobile Merger Hits Another Road Block AT&T and T-Mobile took a major step backward in their attempt to merge, announcing Thursday that they have withdrawn their application to the Federal Communications Commission for approval of the $39 billion deal. The move comes after FCC Chairman Julius Genachowski indicated on Tuesday that he did not approve of the deal, informing other commissioners that the matter should be sent to an administrative hearing. That is the first step towards blocking the proposal. The agency typically makes such referrals in cases where it cannot find a public benefit to a deal, or if it has a lot of questions about it. The companies said they would focus on getting approval from the Justice Department through trial or settlement. The DOJ's anti-trust case against the T-Mobile deal will be heard in February. AT&T issued a statement that they are taking this step to facilitate the consideration of all options at the FCC. Deustche Telekom said it was an effort by both companies to consolidate their strength. However, AT&T has also said it will take a $4 billion charge to its balance sheet to reflect the potential fee it would owe Deutsche Telekom should the deal fall through. The merger would make AT&T the largest mobile provider in the United States, but it has been plagued by anti-trust concerns from the get-go. Eliminating T-Mobile from the market would leave just three significant national service providers AT&T, Verizon and Sprint. Of the three, Sprint would easily be the smallest.* AT&T withdraws T-Mobile merger plan from FCC Reporting from Los Angeles and Washington The end might be near for AT&T Inc.'s proposed $39-billion purchase of T-Mobile USA Inc. Facing growing opposition, telecommunications giant AT&T announced Thursday that it is withdrawing its merger plan from further consideration by the Federal Communications Commission. Instead, it said it would concentrate first on winning approval from the U.S. Justice Department, which sued to stop the purchase. And, in case the deal collapses, the company said it's setting aside $4 billion it would owe in breakup fees to T-Mobile's German owner, Deutsche Telekom. The company's decision was announced days after FCC Chairman Julius Genachowski said he opposed the merger, which would create the nation's largest wireless company. Genachowski proposed an administrative hearing a rare and lengthy process last used for a major deal in the 1960s. The two companies announced the huge merger this spring, saying the deal would enable AT&T to speed up the spread of fast, next-generation 4G wireless service while increasing competition and lowering prices. But a slew of opponents including government agencies, consumer advocates and competitors such as Sprint Nextel Corp. objected. They argued that a combination of second-ranked AT&T with fourth-ranked T-Mobile would leapfrog current subscriber king Verizon Wireless. The hybrid company would end up with 75% of wireless subscribers and nearly 80% of revenue, according to the think tank American Antitrust Institute. That has sparked dire predictions of shrinking competitive options that would cause tens of millions of customers to pay more for deteriorating service while also trampling demand for technicians and engineers. The marriage, many fear, would also trigger as many as 20,000 layoffs as the companies reduce redundancies in accounting, marketing and other departments. "This merger would kill competition, put tens of thousands of people on the unemployment line, and leave all of us paying more for our mobile phones," Craig Aaron, chief executive of advocacy group Free Press, said in a statement. "No amount of spin can change the fact that this deal is cooked. It's time for these companies to walk away." AT&T has said that it intends to invest $8 billion to expand the broadband network, including to rural areas, and plans to create 96,000 jobs while doing so. The company has also promised to bring 5,000 call center jobs to the U.S. from other countries. In joint statements quietly released Thanksgiving Day when the markets were closed the companies said they would try again for the FCC's go-ahead "as soon as practical" and stressed that they "are continuing to pursue the sale." AT&T declined to comment further. To succeed, the deal must clear both the FCC and the Justice Department a requirement that is looking increasingly tough. "The chances that AT&T will take over T-Mobile are almost gone," Gigi B. Sohn, president of consumer advocacy group Public Knowledge, said in a statement. Sohn, whose group opposes the deal, said that AT&T's retreat "speaks volumes about the company's lack of confidence." She and other consumer advocates said they suspect that the telecom giants withdrew their applications to prevent the FCC from publicly disclosing findings in a hearing about the merger's potentially ruinous consequences on competition and pricing for services.