RealTime IT News

AT&T-BellSouth Merger Approval Stalled

UPDATED: WASHINGTON -- The Federal Communications Commission (FCC) delayed a vote on the AT&T and BellSouth merger today and rescheduled the issue for Nov. 3.

After delaying the vote from Thursday to Friday at 11 a.m., the commissioners remained sequestered until after 1 p.m., when FCC Chairman Kevin Martin finally cancelled the meeting.

An hour after the meeting was scheduled to begin, the two Democrats on the five-person panel publicly released a letter asking Martin to open the approval process for public comment.

Martin responded with his own letter, granting the delay.

"The record raises serious questions about whether this combination as proposed would satisfy the public interest," stated a letter signed by Democrats Michael Copps and Jonathan Adelstein.

"Moreover, the commission's review of this proposed combination is set against a backdrop of rapid consolidation and high levels of market concentration in the telecommunications industry."

As of midday, Martin's office had no comment on the letter.

The Department of Justice approved the merger on Wednesday with no strings attached.

Martin also supports unconditional approval of the merger, but is hamstrung by Republican Commissioner Robert McDowell's decision to recuse himself from the vote.

Appointed to the FCC earlier this year, McDowell previously worked as a lobbyist for competitive local exchange carriers, who oppose the merger.

With McDowell sitting out the vote, Martin is left with only two Republican votes to counter the opposition of Copps and Adelstein, who are pushing for network neutrality terms to be attached to the merger approval.

In last year's approval of the AT&T-SBC and Verizon-MCI merger proposals, the FCC imposed a two-year network neutrality provision to the deals.

The conditions require AT&T and Verizon to treat all network traffic equally through 2007.

Freed from many of the rules that dictated Internet access in the dial-up era, both Verizon and AT&T have publicly stated they intent to ultimately charge content providers such as Google and Amazon extra fees based on bandwidth consumption.

The telephone giants have also pledged not to block, impair or degrade consumer Internet connections.

Unable to convince Martin to condition approval upon network neutrality considerations, Copps and Adelstein now want Martin to extend the review period.

"We specifically request that the commission…allow the applicants to put forth their best proposals and solicit expeditious public comment so we can receive a full record," the two Democrats wrote.

"Such an approach is even more important because the Department of Justice approved this combination with little substantive analysis."

The merger would make AT&T the world's largest telecommunications company with 70 million landline customers across 22 states. Currently a co-owner of Cingular Wireless with BellSouth, the deal would give AT&T full control of the nation's largest cellular company.

Combining the two companies' DSL broadband customers would give AT&T 9.1 million high-speed Internet customers, barely behind market leader Comcast's 9.3 million subscribers.

When the proposed merger was announced in March, the stock swap was valued at $67 billion. The rising price of both stocks over the months has pushed the value to almost $80 billion.