WASHINGTON-The Federal Communications Commission’s scheduled vote on AT&T Inc.’s proposed $69 billion acquisition of BellSouth Corp. imploded last Friday, with Chairman Kevin Martin delaying action on the deal until at least next month. The news follows revelations that AT&T has offered to accept merger conditions in order to win unanimous agency approval of the deal.
Democratic FCC Commissioners Michael Copps and Jonathan Adelstein asked Martin to postpone the vote-which originally was to have taken place Oct. 12 but was postponed to Oct. 13-and also to outline AT&T’s proposal for conditions on the merger. Martin agreed to do so, saying he would put AT&T’s offer out for public comment, and try to schedule a vote on the deal on Nov. 3.
It’s not clear what AT&T’s proposal entails.
Telecom analysts say BellSouth and AT&T want the FCC to sign off on the merger before the Nov. 7 midterm elections, fearing possible complications if Democrats regain one or both chambers of Congress. It appears AT&T is willing to accept some conditions in order to push the deal through quickly.
“We ran short of time to gain final approval for the merger today, which is not uncommon in these matters,” said an AT&T spokesman. “We look forward to the Nov. 3 FCC meeting, when we expect the FCC to complete its review, approve the merger and allow us to begin delivering the numerous benefits of the merger to consumers.
“We firmly believe, as do three foreign countries, 18 state commissions and the Department of Justice-every regulatory or legal entity that had an obligation to examine the benefits of this merger-that no conditions on this merger are necessary for this combination to be a public benefit. However, we are open to discussing with the Democratic FCC Commissioners reasonable conditions on the merger in order to obtain unanimous approval, so long as they do not affect our ability to deliver merger benefits to customers and shareowners, given the intensely competitive environment in which we operate.”
Federal law essentially halts lobbying during the seven days from the date the FCC releases a public-meeting agenda. However, FCC commissioners can reach out to telecom companies. It is unclear who contacted whom in this case.
NuVox Communications and XO Communications filed an emergency petition with the FCC demanding disclosure of any AT&T communications with the FCC on the AT&T-BellSouth merger.
Martin has refused to say whether the agency’s office of general counsel will force Republican Commissioner Robert McDowell-who removed himself from merger deliberations because of conflict-of-interest considerations related to past lobbying for a competitive telecom trade group-to vote on the AT&T-BellSouth merger by declaring him ethically fit to participate.
Without McDowell, Martin seemingly faces a 2-2 deadlock in trying to clear the AT&T-BellSouth deal free of conditions. Martin supports the Justice Department approach of approving the transaction without conditions, a stance that consumer groups, lawmakers and telecom competitors have decried as unjustified. At a minimum, critics want the FCC to impose conditions on wireless broadband spectrum and special-access lines controlled by AT&T and BellSouth.
A federal court here is reviewing the Justice Department’s handling of AT&T-SBC Communications Inc. and Verizon Communications Inc.-MCI mergers approved last year by the FCC and DoJ. Both mergers had conditions attached to them.
“Only two weeks ago, members of Congress on both sides of the aisle urged the department not to act prematurely on the AT&T/BellSouth merger, but to instead await the outcome of the ongoing court proceeding in other mega-telecommunications mergers-which raises the same competitive concerns-and to place specific conditions on the merger to protect competition,” said Sen. Patrick Leahy (D-Vt.), ranking member of the Senate Judiciary Committee. “By approving the merger without any conditions, the administration is avoiding court review, ignoring Congress and protecting big business at consumers’ expense. Congress must be vigilant-if the Bush administration will not be-to protect consumers from anticompetitive actions and attempts at re-monopolization.”
AT&T’s bid to buy BellSouth was originally valued at $67 billion, but the dollar value has risen with the rise of AT&T’s stock price since the deal was first announced earlier this year.
“The approval … of the merger of these two Bell behemoths by the Department of Justice, without any competitive or consumer safeguards or conditions, underscores how the Bush Administration’s Antitrust Division has become the executive branch’s version of Rip Van Winkle-it appears to be deep in the throes of a multiyear slumber,” said Rep. Edward Markey (D-Mass.), ranking member of the House telecom and Internet subcommittee.
