FCC delays vote on AT&T

2 Democrats snag merger with BellSouth

FCC Democrats delay vote on AT&T

October 14, 2006|By Marilyn Geewax | Marilyn Geewax,Cox News Service

WASHINGTON -- AT&T Inc.'s proposed $80.1 billion purchase of BellSouth Corp. was delayed yesterday when the Federal Communications Commission postponed a vote amid calls to attach consumer protections to the deal.

Two Republicans on the five-member commission support the deal, but the panel's two Democrats insist on concessions by the phone companies.

They were harshly critical of the Justice Department's decision Wednesday to approve the merger without any strings attached.

A third Republican, Robert M. McDowell, was expected to abstain from the vote because he used to lobby for rivals of AT&T and BellSouth. The resulting 2-2 deadlock has given Democrats leverage to extract concessions.

FCC Chairman Kevin J. Martin, one of the Republicans supporting the deal, ordered his staff to open another 10-day period for gathering public comments, and set a new meeting on the issue for Nov. 3.

Analysts said they still believed the deal will be approved. The debate, they said, is over what conditions the FCC will require.

Consumer groups have pushed the FCC to require the new AT&T to:

Let consumers subscribe to high-speed Internet service even if they don't have phone service with the company.

Lease more lines to local phone and data service providers.

Accept some restrictions against charging higher rates to online content providers who are not affiliated with them.

"There is no need to rush this deal through," said Consumers Union spokeswoman Jeannine Kenney. She said the postponement will give the FCC time to have "a more open and transparent process" as they evaluate creation of what would be the nation's largest telecommunications company, with operations in 22 states.

AT&T spokesman Michael Balmoris said in a statement that a delay "is not uncommon in these matters" and that the company believes the FCC soon will "complete its review, approve the merger and allow us to begin delivering the numerous benefits of the merger to consumers."

Balmoris said AT&T is willing to accept "reasonable conditions" providing "they do not affect our ability to deliver merger benefits to customers and share owners."

Martin, the FCC chairman, has indicated he wants the acquisition to proceed with no strings attached.

But the two Democrats on the five-member commission, Jonathan S. Adelstein and Michael J. Copps, have been pushing hard to get consumer protections.

Shortly after noon yesterday, more than an hour after the FCC meeting was to have begun, reporters were handed copies of a letter that Adelstein and Copps had written to Martin.

The Democrats said the decision should be delayed because AT&T has made proposals in recent days that "raise a number of significant questions and complex technical issues for us to consider." They urged that the FCC "open this process to public comment."

About 2 p.m., reporters were given a copy of Martin's reply. The chairman said he was willing to extend the comment period, but added that he hoped the Democrats would "avoid any further delay in our consideration of this transaction."

The Democrats, although a minority on the five-member FCC, have an unusual amount of leverage in this case.

Martin is supported by a fellow Republican commissioner, Deborah Taylor Tate.

Analysts believe the fifth commissioner, McDowell, would support his fellow Republicans.

But he has not been participating in the negotiations because of a potential conflict of interest. He previously was a lobbyist for Comptel, an association representing AT&T's competitors.

Comptel has urged the FCC to "protect consumers from the re-monopolization of the communications industry."

Also, NuVox Communications and XO Communications, two local phone companies that compete with AT&T, have filed an emergency motion with the FCC, urging disclosure of AT&T negotiations over merger conditions.

AT&T needs only FCC approval to complete its purchase of BellSouth and create the nation's biggest telecommunications company.

AT&T would also gain full ownership of Cingular Wireless LLC, the largest U.S. mobile-phone carrier, which it now owns jointly with BellSouth.

On Wednesday, the U.S. Justice Department signed off on the merger without conditions after concluding the deal would not hurt consumers.

Bloomberg News contributed to this article.

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