McDowell Cleared for AT&T-BellSouth Merger Vote

Federal Communications Commission (FCC) General Counsel Sam Feder cleared Commissioner Robert McDowell late Friday afternoon to participate in the AT&T-BellSouth merger vote.

McDowell, a Republican commissioner, is expected to vote in favor of the merger, breaking the 2-2 tie between Chairman Kevin Martin and fellow Republican Deborah Taylor Tate and the two Democrats at the FCC, Michael Copps and Jonathan Adelstein.

The Department of Justice and 18 state regulatory agencies have already approved the $80 billion mega merger with little or no conditions. The merger would create the world’s telecommunications company.

In order to avoid the appearance of a conflict of interest, McDowell had recused himself from the vote because of his lobbying work immediately prior to joining the agency earlier this year. McDowell’s then employer, CompTel, a trade group of independent local exchange carriers, oppose the deal.

Last week, Martin asked FCC attorneys to “unrecuse” McDowell for the vote.

“Balancing these competing concerns here was difficult, and reasonable people looking at these facts could disagree about the appropriate result,” Feder wrote in a memo to McDowell. “However, on balance…I find that you should not be barred from participating in this proceeding if you choose to do so.”

Feder said the government has a “significant interest” in the license transfers between BellSouth and AT&T and that since 2000 the FCC has generally ruled on mergers within 180 days. The AT&T-BellSouth merger has been pending for eight months.

Feder added that McDowell is still free to abstain from participating in and voting on any proceeding.

“If you feel appearance concerns outweigh the government’s interest here or you have any other reason to abstain from participating, you are free to do so,” Feder wrote.

McDowell said in a statement he was reviewing Feder’s memo.

“In the meantime, I strongly urge the participating parties and my four colleagues to resolve their differences in the same amicable and unified manner they did in the similar merger between SBC and AT&T just last year,” McDowell said.

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 also 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.

“It is in the interest of the government and the American people to move this matter forward in a timely fashion,” Martin said in a statement.

Gigi Sohn, president of the Internet advocacy group Public Knowledge, issued a statement critical of Feder’s opinion and urged McDowell to abstain from the vote.

“Commissioner McDowell made the right decision to recuse himself in this proceeding, and FCC General Counsel Sam Feder’s opinion said nothing that should cause the commissioner to change his view,” Sohn said.

Copps and Adelstein have used the deadlocked proceedings to force additional conditions to the merger on AT&T. The company has agreed to adhere to the FCC’s four network neutrality principles for 30 months after the official closing of the merger.

In addition, AT&T promised to offer standalone DSL over that same period and pledged to offer free modems for those customers upgrading from dial-up to broadband. The company said broadband offerings would be available to 100 percent of the merged territory within the next 12 months.

The two FCC Democrats want AT&T to modify its commercial broadband pricing plan calling for content providers such as Amazon and Google to pay extra fees based on bandwidth consumption. Copps and Adelstein want broadband carriers to handle network traffic in a non-discriminatory manner, including pricing.

AT&T said earlier this week it is unwilling to make any more concessions, prompting Martin to declare the negotiations at an impasse and seek McDowell’s participation in the vote.

“On a broader scale, the concept of the public interest was nowhere to be found in this general counsel’s opinion,” Sohn said. “The chief concern is the effect on the companies involved, and not the effects of the public interest. Government’s role should be broader than meeting arbitrary deadlines or acting for the convenience of large companies.”

The FCC next meets on Dec. 20, giving McDowell less than two weeks to review the merger negotiations.

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