When AT&T (NYSE: T) saw FCC commissioner Julius Genachowski unsheathing a rarely used weapon against unwanted radio-wave mergers, Ma Bell backed off to regroup.

AT&T and Deutsche Telekom have dropped their FCC application to transfer radio-spectrum licenses, but the companies plan to refile that crucial application when the time is right. In the meantime, the battle goes on to convince the DoJ, Sprint Nextel (NYSE: S), and other deal critics that AT&T-Mobile is a good idea, and not at all a job-destroying, anticompetitive Faustian deal.

For the first time, AT&T admits that the merger might indeed fail: The telecom giant is taking a $4 billion charge in the current quarter to account for payment of the potential breakup fee. This is new.

Management would dearly love to keep that $4 billion in the bank, of course. Expect the reworked FCC application to show significant differences from the first version.

AT&T might sell some overlapping spectrum licenses to MetroPCS (NYSE: PCS), Sprint, or a patchwork of regional networks such as Cincinnati Bell (NYSE: CBB). That's a good start. In fact, it might cure the bulk of the FCC's objections, given the agency's radio-centric jurisdiction. If the telecoms simply wanted to avoid the torpedo that sank a blockbuster combination of DirecTV (Nasdaq: DTV) and EchoStar (Nasdaq: SATS) a decade ago, I guess it's mission accomplished.

But job losses should be a far bigger sticking point, and that one has little to do with the FCC. Bringing call centers back to the U.S. while chopping higher-paid heads in engineering, field installations, and other departments doesn't sound like high-quality job creation. In this economic climate with rampant unemployment, I wouldn't be surprised to see the White House stepping in with a veto if all the other checks and balances fail. And I don't know how AT&T would work around this huge issue without losing the biggest cost-control benefits of merging in the first place.

This action notwithstanding, I agree with AT&T's suddenly cautious accountants: Dead deal walking.

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