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FCC Chairman Wants Telephone Mega-Deals OK'D Without Strings

Posted on: Thursday, 13 October 2005, 09:01 CDT

By Jennifer C. Kerr

The top federal communications regulator wants two multibillion- dollar telecommunications mergers approved without requiring the companies to sell off assets.

The deals are SBC Communications's $16 billion acquisition of AT&T and Verizon Communications' $8.5 billion offer for MCI Inc.

Federal Communications Commission Chairman Kevin Martin planned to send his fellow commissioners proposals outlining his reasons for seeking approval, a person close to the matter told The Associated Press on Friday. This person was authorized to speak about the proposals only on the condition of anonymity because the petitions have not been made public.

If Martin gets at least two of the three other commissioners to agree, the mergers could be approved at the commission's monthly meeting Oct. 28.

The Justice Department's antitrust division also must approve the deals, and it is the agency that would go to court if there were any government effort to force some assets to be divested. Justice is not bound by any decision the FCC reaches, but the commission's position would have considerable influence on the final ruling.

SBC and Verizon already are the largest regional phone companies. The mergers would enhance their base of business customers and expand their national and international presence.

Critics say the mergers will lead to fewer choices for consumers and higher prices, a claim both SBC and Verizon dispute.

"What you have here in both cases is an enormous telephone monopoly merging with its most likely competitor for local and long- distance phone service, and its most likely competitor for building a voice over Internet alternative to the local phone company," said Gene Kimmelman, senior policy director at Consumers Union, the publisher of Consumer Reports magazine.

Economist Jonathan Rubin said the mergers would hurt residential and business customers.

"With AT&T and MCI around as stand-alone carriers, there is at least some semblance of competition," said Rubin, senior research fellow at the American Antitrust Institute, a group that advocates vigorous antitrust enforcement. "If these mergers are approved without meaningful conditions, I don't think there is any question that competition will be substantially impaired."

Verizon spokesman David Fish said the criticism was "hopelessly mired in the past."

Fish said the world has changed, and Verizon and MCI are adapting to that change. "This combination creates a new player better able to compete, invest in critical infrastructure and provide next- generation services to consumers."

European Union regulators approved the Verizon-MCI merger Friday, saying the deal between the two telecommunications companies would not harm competition in Europe.

Source: Buffalo News

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