FCC head said to be backing telecom deal

by JOHN DUNBAR, Associated Press

The chairman of the Federal Communications Commission (FCC) is recommending approval of AT&T's $67 billion purchase of BellSouth, people familiar with the matter said Friday.

FCC Chairman Kevin Martin circulated a recommendation approving the purchase without conditions late Thursday night, meaning a formal vote is likely at the agency's Oct. 12 meeting.

The FCC's action is unusual in that it comes before the Justice Department has decided whether the deal will adversely affect competition and possibly harm consumers.

Justice is still involved in challenges to two previous telecommunications-industry mega-deals: SBC Communications' purchase of the old AT&T Corp., and Verizon's purchase of MCI.

People who have seen the FCC document say there appear to be no conditions on the sale, but that requirements to satisfy potential negative impacts on consumers may come later in the process.

Those describing the document did so only on condition of anonymity since they are not authorized to speak publicly about a regulatory matter still under way.

The agency is also circulating a "notice of inquiry" regarding the issue of "network neutrality" — whether Internet service providers should be forced to provide equal treatment to all traffic on their networks.

Network-neutrality supporters have stymied a major rewrite of telecommunications law in the Senate, at least until after the November elections.

AT&T is already the largest telecommunications company in the U.S., reporting $62 billion in revenue in 2005. AT&T and BellSouth also co-own the nation's largest mobile-phone company, Cingular Wireless, with 57.3 million customers.

BellSouth, based in Atlanta, reported $34 billion in revenue in 2005.

AT&T spokesman Dave Pacholczyk said Friday the merger is "strongly in the public interest, as 18 states have now determined."

Not everyone agrees.

"Ultimately the AT&T-BellSouth merger will be disastrous to the 50 percent of Americans whose phone lines are controlled by AT&T," said Jeannine Kenney, senior policy analyst with Consumers Union, the nonprofit publisher of Consumer Reports magazine.

Those opposed to the merger said the FCC appears to be rushing the process. They could recall only one major telecommunications merger in which the agency acted before Justice Department approval — the proposed combination of satellite broadcasters DirecTV Group and Echostar.

The FCC rejected that deal.

article originally published at http://seattletimes.nwsource.com/html/businesstechnology/2003271804_att23.html.

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