Despite recusal shenanigans, McDowell says won't vote on AT&T/BellSouth

FCC's McDowell says won't vote on AT&T/BellSouth

U.S. Federal Communications Commissioner Robert McDowell said on Monday he declined to cast the tie-breaking vote on whether to approve AT&T Inc.'s proposed purchase of BellSouth Corp. , likely adding pressure on the companies to offer more concessions.

The FCC has been reviewing the proposed $85.7 billion deal for more than seven months. The four other commissioners, two Republicans and two Democrats, have been deadlocked for weeks over what conditions to attach.

McDowell had previously said he would not vote because of his past work for rivals to the two telephone carriers, but he was authorized on Dec. 8 to participate in the review by the FCC's general counsel, if he chose to do so.

In declining to participate, McDowell cited an agreement he had with the FCC's ethics office to disqualify himself for one year from matters involving his previous employer, Comptel, as well as concerns of the U.S. Office of Government Ethics.

"Accordingly, I disqualify myself from this matter," he said in a statement he read to reporters.

Analysts at Stifel, Nicolaus & Co. said in a note before McDowell's announcement that they believed his absence would increase the possibility of even greater delays, and that "AT&T and BellSouth would have to make deeper concessions than expected, with some risk of a continuing impasse."

AT&T has offered some concessions, including freezing some wholesale rates for competitors to gain access to its network and a low-cost basic high-speed Internet package. But the competitors, some represented by Comptel, have complained the offers are not enough.

McDowell's decision increases pressure on the companies, FCC Chairman Kevin Martin and the two Democrats, Michael Copps and Jonathan Adelstein, to reach a compromise.

One FCC official said the areas of disagreement between the Republicans and Democrats were significant and not easily bridged.

McDowell said he feared his recusal had been used as a pawn to forgo "meaningful and sincere" negotiations and he urged his colleagues to put aside their differences and offer the necessary concessions to complete the review.

"Now that I am removing that chess piece from the board, I hope that the twin pillars of sound negotiations are restored: good faith and sacrifice," he said.

During recent negotiations, talks have centered on a possible arbitration process to resolve disputes over rates for competitors to lease lines, as well as prioritizing Internet content from providers who pay a fee, an issue known as Net neutrality.

"With Commissioner McDowell having made his decision, I will continue to try to work with my colleagues to bring our consideration of this merger to conclusion," Martin said in a statement.

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