What a circus the AT&T-BellSouth approval process has become. That's because the approval of past mergers with few conditions are catching up with the Federal Communications Commission. Now AT&T and BellSouth, Cingular Wireless' parents, are going to pay.
Last week, the FCC for the third time was forced to postpone a vote on the $80 billion merger between the two companies because the four voting commissioners couldn't agree on the regulatory conditions that should be imposed on the union.
The delay is being caused by a standoff between Democratic commissioners Michael Copps and Jonathan Adelstein, who have concerns about the anti-competitive impact of the merger, and chairman Kevin Martin and commissioner Deborah Taylor Tate.
The fifth commissioner, Robert McDowell, has withdrawn from the vote on this issue because he was formerly a lobbyist for Competitive Telecommunications Association (CompTEL), the industry organization that represents the interests of competitive local exchange carriers.
AT&T is angry. "In order to obtain expeditious FCC approval, we have put on the table a number of proposals that directly benefit consumers--such as a $10 per month broadband offering and broadband connectivity to rural and low-income areas," AT&T said in a statement last week. "These unprecedented conditions unrivaled by any other communications provider in a merger proceeding have been fully examined in an open, public debate, and have received glowing approval from a broad range of individuals and groups."
AT&T and BellSouth are forced to embark on these "unprecedented conditions" because the DOJ rubber-stamped the deal in October without any conditions, angering consumer groups, Congress members, smaller rivals and Democrat FCC commissioners. And surely past mergers, namely the deals between AT&T and SBC and Verizon and MCI, raised concerns that the DOJ and FCC didn't go far enough.
This summer, federal court Judge Emmet G. Sullivan said he was concerned that the consent decrees negotiated by the U.S. Department of Justice with both AT&T/SBC and Verizon/MCI may not go far enough to ensure the deals are not anticompetitive. The DOJ had approved both consent decrees under the condition that some fiber-optic facilities would be divested. Judge Sullivan is deciding on the matter now.
What does this all mean? AT&T and BellSouth will get their merger approved, but likely with some stringent conditions (unless McDowell is forced into the fray). The supposed laissez-faire appearance in approving mergers means the FCC could swing the pendulum the opposite direction-especially if Democrats wield more power in Congress after Tuesday. The question is: Will these conditions circumvent the reasons the two are merging in the first place? I'm all for competition, but mergers typically don't benefit anyone when they are severely watered down by government decree through the sale of certain parts of businesses. This is an industry characterized by nimble companies coming in and taking a substantial bite out of dominant players. Are we entering an era when the market won't get to decide what are or aren't the best business combinations? -Lynnette
Also: You might have have noticed, the FierceWireless website and newsletter now feature a comment link for each article. To promote this new feature and increase reader participation, we are holding a cell phone giveaway contest every week in November called Let Your Voice Be Heard. This week, we will be giving away a Sony Ericsson W810i in a random drawing to one lucky participant--and all you have to do is post a relevant comment on any of the stories on the site!