) -- The

Federal Communications Commission

Tuesday said in a media call that it plans to oppose


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$39 billion merger with


, increasing the chances that 2011's largest merger will fail.

FCC chairman Julius Genachowski plans to ask for an administrative hearing on the deal that would add to headwinds for the merger. In August, the

U.S. Department of Justice

filed a lawsuit against AT&T and T-Mobile seeking to block the merger on antitrust concerns.

The FCC joins its opposition to AT&T's $39 billion T-Mobile merger.

Combining AT&T with T-Mobile would bring together the second and fourth largest wireless carriers, creating the biggest operator with a near 40% market share and leaving


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as its closest competitor with an over 30% market share.

More to the antitrust concerns, it would put


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in a distant third at an over 15% share, with no clear fourth competitor. Sprint has filed a lawsuit against AT&T opposing the merger on competition grounds.

Under the proposed order, the FCC will take the merger to a judicial hearing where AT&T will need to prove that its T-Mobile purchase is in the public's interest. The FCC does not have the ability to block the merger outright like the Department of Justice, but it can call for hearings or ask for divestitures to remedy any antitrust concerns.

When opposing the merger on antitrust grounds in August, the Department of Justice said, "the proposed $39 billion transaction would substantially lessen competition for mobile wireless telecommunications services across the United States, resulting in higher prices, poorer quality services, fewer choices and fewer innovative products for the millions of American consumers who rely on mobile wireless services in their everyday lives."

Tuesday's news that the FCC will likely join in legal contest to the merger is not a surprise -- it just means that even if AT&T were to pass a DoJ challenge, it would then have the FCC to deal with.

After the DoJ announced its antitrust lawsuit this summer, FCC chairman Julius Genachowski said in a statement, "competition is an essential component of the FCC's statutory public interest analysis, and although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition."

As part of the proposed deal, AT&T agreed to give T-Mobile a breakup fee of $6 billion in cash and wireless spectrum if the acquisition fell through on antitrust concerns or other issues like financing. If triggered, the breakup fee would be the biggest ever, according to data compiled by

Thomson Reuters

In October, AT&T wrote a letter to the FCC stating that the deal could preserve over 20,000 call-center jobs in the United States and return another 5,000 jobs from overseas. Throughout the merger process, AT&T has stated that the combination would put its service within reach of rural communities and bolster its 4G network coverage, making it better equipped to serve the data needs of consumers using smartphones like the


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After the Department of Justice lawsuit was filed in August, AT&T said in a statement, "We are surprised and disappointed by today's action, particularly since we have met repeatedly with the Department of Justice and there was no indication from the DOJ that this action was being contemplated. We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed."

Based on Tuesday's close at $28.08, AT&T shares are down 4% so far in 2011.

Following Tuesday's news, Larry Solomon, an AT&T communications senior vice president, said in a press release: "At this time, we are reviewing all options."

He added, "it is yet another example of a government agency acting to prevent billions in new investment and the creation of many thousands of new jobs at a time when the U.S. economy desperately needs both."

The DoJ antitrust trial regarding the merger is slated to begin in mid-February 2012.

In separate news, the FCC said on Tuesday in a draft order that it approved AT&T's $1.925 billion acquisition of wireless spectrum from


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in 2010, subject to unnamed conditions.


Written by Antoine Gara in New York