AT&T and Bell South merged Dec. 29 shortly after the Federal Communications Commission gave its final approval to the $86 billion merger and a day after two Democratic commissioners wielding unusual clout extracted major concessions to win the deal’s OK.
The merger unifies Cingular Wireless L.L.C.’s two parent companies. Cingular is the nation’s largest cell phone carrier. AT&T said it will begin to transition the Cingular brand to the AT&T brand starting in early 2007.
Interestingly, AT&T Inc. will reportedly rely on advertising as a main revenue stream and urge customers to adopt new wireless data services.
The Wall Street Journal reported that AT&T’s chairman and CEO Edward E. Whitacre Jr. called Cingular Wireless L.L.C. the “biggest asset” of the acquisition, and added that AT&T was “about to become a company with wireless at its heart.” AT&T gained full control of Cingular, which previously was a joint venture with BellSouth.
Even as the approval was coming down there was a new warning from Congress that the procedure the FCC used to reach an agreement will bear scrutiny when Democrats arrive next week.
“I am pleased to learn that all sides have reached agreement and that the merger will soon close,” said John Dingell (D-Mich.), incoming chairman of the House Energy and Commerce Committee. “At the same time, I have significant concerns over the process followed at the FCC during these final weeks, and believe that such process may be suitable for Committee review.”
Dingell has been upset that FCC chairman Kevin Martin tried to get a third Republican, Commissioner Robert McDowell to vote. McDowell, a former telecom lobbyist, recused himself from voting.
Today’s approval puts into AT&T four of the baby bells broken apart by the government in 1984 out of the original AT&T and changes the competitive environment in several ways.
Consumer groups say concessions made by AT&T could alter the competitive environment not just for AT&T but for its rivals. AT&T agreed not to charge content providers extra for video delivered using new high speed pipes for 30 months, to aggressively roll out cable alternatives in BellSouth’s area and to require AT&T provide unbundled DSL service to consumers who don’t want phone lines.
They also said that some wireless spectrum required to be sold could provide another potential video competitor to cable.
Others including the two voting Republican members of the FCC today said many of the concessions were unnecessary, noting that the Justice Department put no conditions in its approval of the deal.
“We find the imposition of some of the conditions, however, to be unnecessary. And, some of the conditions impose burdens that have nothing to do with the transaction, are discriminatory, and run contrary to commission policy and precedent,” Commission Chairman Kevin Martin and Commissioner Deborah Taylor Tate said in a statement.
Democrats meanwhile said the decision wasn’t ideal but the best they could muster in the face of a Justice Department inaction that Commissioner Michael J. Copps called “a strange and tortured odyssey.”
He called the merger “not a triumph for huge corporate mergers but a modest victory for American consumers.”
Commissioner Jonathan Adelstein said a historic merger warrants historic conditions.
“This transaction has given me serious pause, but through hard work and genuine compromise, we were able to achieve a result that delivers major, tangible benefits to consumers.”
Ira Teinowitz is a reporter for TV Week, a sister publication to RCR Wireless News. Both publications are owned by Crain Communications Inc.
