WASHINGTON—The Federal Communications Commission postponed until Friday a vote on AT&T Inc.’s $69 billion acquisition of BellSouth Corp., but harsh criticism by the agency’s two Democrats, consumer groups and a key House lawmaker over the Justice Department’s no-strings-attached approval of the deal could force a longer delay.
The FCC last night removed the AT&T-BellSouth deal from today’s meeting agenda, following a day of condemnations of the Justice Department’s action and calls for the commission to give the acquisition closer scrutiny than that of DoJ’s antitrust division. The deal 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.
Talking to reporters following today’s FCC meeting, Martin gave no indication 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 purchase 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. Democratic Commissioners Michael Copps and Jonathan Adelstein yesterday blasted the Justice Department for signing off on the proposal without forcing concessions from the two telecom companies that co-own Cingular Wireless L.L.C.—the No. 1 mobile phone carrier.
Others in Washington blasted the issue.
“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, yesterday. “The historic sound of its marketplace-watchdog bark has been replaced by a gentle snore. Today’s decision represents a shirking of its important responsibility. Hopefully, the Federal Communications Commission will step in to assure consumers and competitors that such mega-mergers may only occur with appropriate, enforceable conditions embodying longstanding public policy principles. The American public deserves no less.”
Two influential Senate lawmakers who asked the Justice Department and FCC to consider requiring, among other things, the sale of BellSouth’s 2.3 GHz wireless broadband holdings, were more understated in their reaction. But, like Markey, they underscored the importance of the upcoming FCC vote.
“In our letter of September 28th, the antitrust subcommittee summarized the results of our investigation and asked the Justice Department to specifically consider a number of issues that raised concerns during our investigation. The Justice Department wrote us to inform us of their decision on the proposed merger, and provided us with a detailed explanation assuring us that our concerns were thoroughly considered during their review process. We have conveyed the same views to the FCC and are confident that they will be addressed fairly,” said Sen. Mike DeWine (R-Ohio), chairman of the Senate Judiciary antitrust subcommittee, and Sen. Herb Kohl (D-Wis.), ranking member of the panel.
AT&T and BellSouth argue a sell-off of wireless broadband assets is not justified, given the large amount of spectrum currently available and already controlled by competitors such as Sprint Nextel Corp.
AT&T and BellSouth must not only overcome objections of consumer groups, lawmakers and top wireless carriers to the structure of merger approval and to the deal itself, but they have to fight the clock. Both companies want to close the merger as soon as possible to avoid political complications to the deal that could arise if Democrats reclaim one or both houses of Congress in the Nov. 7 midterm elections.
