By Jasmin Melvin
WASHINGTON (Reuters) - A U.S. lawmaker with oversight of technology expressed concern that AT&T Inc's plans to take over T-Mobile USA would stifle innovation in the wireless market.
Representative Greg Walden, chairman of the House subcommittee on communications and technology, said he did not want to see a merger diminish the vibrant and competitive nature of wireless.
AT&T's $39 billion bid to buy Deutsche Telekom AG's T-Mobile USA would concentrate 80 percent of U.S. wireless contract customers in just two companies -- AT&T/T-Mobile and Verizon Wireless, a joint venture of Verizon Communications and Vodafone Group Plc.
AT&T, currently the No. 2 U.S. mobile carrier behind Verizon, has said the merger will spur innovation and economic growth by improving quality and expanding wireless service to 95 percent of Americans.
But Walden expressed concern about eliminating a national carrier.
"It seems to me if there are fewer and fewer players in a market, there's less and less opportunity for that creative innovation and invention that has occurred so far in the wireless market," he said at an event sponsored by news service Politico Pro.
The merger needs the approval of the U.S. Federal Communications Commission and the Justice Department and the process is expected to take at least a year.
Walden has no direct input into those reviews but his subcommittee has oversight of the FCC, and he did not rule out hearings on the merger proposal.
He said his panel would be very critical of the FCC's merger review process, checking for potential abuses of power.
Walden criticized agencies that use their authority over mergers to "extort policy changes."
Congress may have to step in, Walden said, with tighter definitions on agencies' authority over mergers.
"The FCC needs to look in the mirror on this one because we're going to come at them very strongly, very forcefully," he added.
AT&T could face a tough battle at the FCC.
FCC Commissioner Michael Copps said at the onset of the Comcast-NBCU merger that it would be a tough sell. That transaction won a majority of the FCC members' approval, but Copps voted against it.
He said in an interview this week for C-SPAN television's "The Communicators," that AT&T's proposal "may be an even steeper climb" and that the deal "sucks the oxygen" out of other issues before the FCC, especially spectrum reform.
But Walden said this was not a concern for him. "I think we're all fairly capable of multi-tasking, and a lot of work goes on even if a hearing isn't announced or scheduled," he said.
The FCC wants Congress to grant it authority to hold incentive auctions that would compensate broadcasters for giving up some of their spectrum to wireless companies.
The agency also wants lawmakers to consent to giving a highly sought after chunk of U.S. airwaves known as the D Block to public safety groups to build out a nationwide mobile broadband network for emergency services.
Walden, a former broadcaster, said he hoped a bipartisan consensus could be reached as spectrum reform is likely to drive innovation, but he was wary of acting too quickly.
"We're going to have a series of hearings to get all these issues out in the open. We're not going to cram something through," he said.
(Reporting by Jasmin Melvin; Editing by Tim Dobbyn)