SBC gets FCC nod to buy Ameritech

Set of 30 conditions is unprecedented

October 07, 1999|By BLOOMBERG NEWS

WASHINGTON -- SBC Communications Inc., the No. 2 U.S. local phone company, received Federal Communications Commission approval yesterday of its $81.1 billion purchase of Ameritech Corp., the No. 5 local company.

The approval includes an unprecedented set of 30 conditions aimed at promoting local phone competition in the Ameritech and SBC regions and encouraging the development of advanced telecommunications services. The companies agreed to pay $2 billion in penalties if they fail to meet the conditions.

SBC-Ameritech combined will be the largest U.S. local phone company, with $46 billion in annual revenue and one-third of all local telephone lines. FCC approval marks the last regulatory hurdle, clearing the way for the companies to close the transaction.

The conditions imposed on the company "will really expedite the opening of these markets and, ultimately, the ability of these companies to get into long distance," said FCC Chairman William E. Kennard.

SBC and the other regional phone companies are prevented by law from offering their customers long-distance service until they prove that their local markets are open to rivals.

The FCC determined that the two companies, by combining their assets, will be a tougher competitor nationally and internationally, benefiting U.S. consumers.

One key condition is that the companies must compete in 30 local telephone markets in the next 2 1/2 years outside the territory they now serve in the Midwest and West or face more than $1.12 billion in fines. They could face more fines if they do not sufficiently open their local phone markets to competition. SBC also agreed to set up a new unit to provide high-speed data services to consumers.

The combined company will also be required to set up uniform computer systems throughout its 13-state territory that will allow competitors to electronically sign up large volumes of customers and process other types of customer-service orders. That is a key condition that will promote local phone competition, Kennard said.

"The company got what it wanted, and the FCC got a lot more concessions than most anyone expected," said Scott Cleland, managing director of Legg Mason Inc.'s Precursor Group. "The FCC and SBC got a big win today."

Pub Date: 10/07/99

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