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FCC Yet Again Postpones AT&T-BellSouth Merger
[November 03, 2006]

FCC Yet Again Postpones AT&T-BellSouth Merger

TMCnet Associate Editor
The Federal Communications Commission has once again postponed the proposed $80 billion mega-merger between AT&T and BellSouth (News - Alert).

The commission was expected to vote on the merger during an open meeting today, however, late in the day yesterday it was announced that the commissioners remained deadlocked because they are unable to agree on conditions for the deal. Therefore the vote was removed from the commission’s agenda and has been postponed indefinitely.

This is the third time the FCC (News - Alert) has postponed its vote on whether to allow the merger. FCC approval is the last regulatory hurdle the deal must overcome before it closes. The Department of Justice approved the deal on Oct. 11 - however, it did so unconditionally, without imposing any restrictions - something which has angered critics of the deal as well as the FCC’s two Democratic members.

Complicating the five-member panel’s decision is the fact that its newest member, Republican Robert McDowell, has had to recuse himself from the vote due to a potential conflict of interest. Prior to becoming a commissioner, McDowell worked for Comptel, a trade organization which is opposed to the merger (and which is also spearheading a review of the previous RBOC mergers under the Tunney Act). That leaves the commission split along party lines, with two Republicans in favor of the merger and two Democrats opposed. Now that the commission appears to be more deadlocked than ever, there has been some speculation that McDowell might end up being forced to vote.

The FCC was originally expected to vote on the deal on Oct. 12, however, it postponed the vote to Oct. 13 after the two Democratic commissioners, Jonathan Adelstein and Michael Copps, expressed outrage that the DOJ hadn’t imposed any conditions. In an effort to assuage the two Democrats, AT&T (News - Alert) submitted a revised proposal, prior to the scheduled meeting, which included additional concessions such as a new $10 a month broadband service tier, free modems and a promise of a temporary freeze on its rates for other service providers that use the telco’s network. (However, it has been difficult to uncover what other concessions are being made because much of the wheeling and dealing is being done behind closed doors). These new terms for the deal resulted in the two Democratic members asking for another day to review it.

However, the FCC’s vote was postponed again on Oct. 13 after the two Democrats said they still could not come to approve - even after considering the concessions put forth by AT&T. Because these concessions have the effect of changing the parameters of the deal, the two Democrats requested, as part of due process, that the commission hold another public comment period. The commission then set Nov. 3 as the new date for the vote and proceeded to hold public hearings on the proposed merger for a period of about three weeks.

Now, even after three weeks of public comments being submitted, the commission remains deadlocked – and the vote has been delayed yet again. Some telecom experts are now predicting that McDowell will be forced to vote on the deal and it is anticipated that he will vote for it.

Providing the merger is approved (which most people do not deny will happen), it will result in the largest U.S. telecommunications provider, with more than 300,000 employees, annual revenue of $120 billion and a market value of more than $200 billion.

Several consumer groups and numerous smaller telecommunications companies have asserted that the deal, as it stands, does not go far enough to protect competition and provide benefits to consumers.


Patrick Barnard is Associate Editor for TMCnet and a columnist covering the telecom industry. To see more of his articles, please visit Patrick Barnard’s columnist page.

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