TELECOM Digest OnLine - Sorted: FCC Stalls AT&T-BellSouth Deal For at Least Another Month

FCC Stalls AT&T-BellSouth Deal For at Least Another Month

John Dunbar, AP (
Fri, 13 Oct 2006 21:41:24 -0500

By John Dunbar
The Associated Press

WASHINGTON - The proposed buyout of BellSouth Corp. by AT&T Inc. hit a
snag on Friday when the two Democrats on the Federal Communications
Commission asked for more time to study last-minute concessions
proposed by AT&T.

The commission had been scheduled to vote Friday, but the timing of any
decision was thrown into doubt by the development; now such a decision
is at least a few weeks away.

An FCC spokeswoman, Tamara Lipper, said that commission Chairman Kevin
Martin was studying a request by Democrats Jonathan Adelstein and
Michael Copps to delay any action while the commission evaluates
AT&T's proposal and it is made available for public comment. Further
complicating the issue, Martin was scheduled to leave the country on
Saturday. Lipper said she did not know when he would return.

The proposed deal already was under fire by consumer advocates and
some lawmakers who said it would go a long way toward re-establishing
a communications monopoly that the government broke up more than two
decades ago.

The FCC's approval would have removed the final major regulatory
hurdle in AT&T's bid to extend its dominance as the nation's largest
provider of phone, wireless and broadband Internet services.

When the deal originally was announced in March, it was worth about
$67 billion. But the rising price of AT&T's stock had pushed the value
to $80.8 billion at the close of trading Thursday.

The Justice Department approved the deal without conditions on
Wednesday. Despite the scale of the purchase, the Justice Department
found no potentially adverse effects on competition.

At that time, Adelstein called the department's decision "a reckless
abandonment of DoJ's responsibility to protect competition and

Copps, the commission's other Democrat, said the "Justice Department
has packed its bags and walked out on consumers and small businesses
by refusing to impose even a single condition in the largest telecom
merger the nation has ever seen."

Copps and Adelstein were in an unusually strong position on the
five-member commission, which has three Republicans. One of those GOP
commissioners, Robert McDowell, was a potential tie-breaking vote who
withdrew from the deliberations because he was a lobbyist who
represented competitors of AT&T and BellSouth.

Republican Deborah Taylor Tate had been expected to vote with Martin
in favor of the acquisition.

If the deal ultimately wins all the government endorsements necessary,
the San Antonio-based AT&T Inc. would get total control over the
nation's largest cellular provider, Cingular Wireless, a joint venture
of the two companies that serves 57.3 million customers.

Consumer advocates and some lawmakers claim the government is well on
its way to reconstituting the old Ma Bell monopoly, which was broken
up in 1984 after a lengthy court battle.

The newly expanded AT&T would have operations in 22 states. AT&T
estimates that about 10,000 jobs would be phased out over three years.

Combined, the companies generate $117 billion in revenue and operate
68.7 million local phone lines stretching coast to coast across the
southern United States and up through the Midwest. The merged company
would employ 309,000 people before any job cuts.

The deal would further the reunification of the seven regional Bell
telephone operating companies and one long-distance provider that were
spun off from the national AT&T monopoly under a federal court order
designed to introduce competition.

Including BellSouth, the new AT&T would consist of four former Bells
and the long-distance business, which was acquired by the company late
last year. The other two companies created from Bells were Verizon
Communications Inc., which dominates the eastern United States, and
Qwest Communications International Inc., the phone company for most of
the Rocky Mountain and Northwest regions.

Copyright 2006 The Seattle Times Company
Copyright 2006 Associated Press

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