FCC Stalls AT&T-BellSouth Deal For at Least Another Month

By John Dunbar The Associated Press

WASHINGTON - The proposed buyout of BellSouth Corp. by AT&T Inc. hit a snag on Friday when the two Democrats on the Federal Communications Commission asked for more time to study last-minute concessions proposed by AT&T.

The commission had been scheduled to vote Friday, but the timing of any decision was thrown into doubt by the development; now such a decision is at least a few weeks away.

An FCC spokeswoman, Tamara Lipper, said that commission Chairman Kevin Martin was studying a request by Democrats Jonathan Adelstein and Michael Copps to delay any action while the commission evaluates AT&T's proposal and it is made available for public comment. Further complicating the issue, Martin was scheduled to leave the country on Saturday. Lipper said she did not know when he would return.

The proposed deal already was under fire by consumer advocates and some lawmakers who said it would go a long way toward re-establishing a communications monopoly that the government broke up more than two decades ago.

The FCC's approval would have removed the final major regulatory hurdle in AT&T's bid to extend its dominance as the nation's largest provider of phone, wireless and broadband Internet services.

When the deal originally was announced in March, it was worth about $67 billion. But the rising price of AT&T's stock had pushed the value to $80.8 billion at the close of trading Thursday.

The Justice Department approved the deal without conditions on Wednesday. Despite the scale of the purchase, the Justice Department found no potentially adverse effects on competition.

At that time, Adelstein called the department's decision "a reckless abandonment of DoJ's responsibility to protect competition and consumers."

Copps, the commission's other Democrat, said the "Justice Department has packed its bags and walked out on consumers and small businesses by refusing to impose even a single condition in the largest telecom merger the nation has ever seen."

Copps and Adelstein were in an unusually strong position on the five-member commission, which has three Republicans. One of those GOP commissioners, Robert McDowell, was a potential tie-breaking vote who withdrew from the deliberations because he was a lobbyist who represented competitors of AT&T and BellSouth.

Republican Deborah Taylor Tate had been expected to vote with Martin in favor of the acquisition.

If the deal ultimately wins all the government endorsements necessary, the San Antonio-based AT&T Inc. would get total control over the nation's largest cellular provider, Cingular Wireless, a joint venture of the two companies that serves 57.3 million customers.

Consumer advocates and some lawmakers claim the government is well on its way to reconstituting the old Ma Bell monopoly, which was broken up in 1984 after a lengthy court battle.

The newly expanded AT&T would have operations in 22 states. AT&T estimates that about 10,000 jobs would be phased out over three years.

Combined, the companies generate $117 billion in revenue and operate

68.7 million local phone lines stretching coast to coast across the southern United States and up through the Midwest. The merged company would employ 309,000 people before any job cuts.

The deal would further the reunification of the seven regional Bell telephone operating companies and one long-distance provider that were spun off from the national AT&T monopoly under a federal court order designed to introduce competition.

Including BellSouth, the new AT&T would consist of four former Bells and the long-distance business, which was acquired by the company late last year. The other two companies created from Bells were Verizon Communications Inc., which dominates the eastern United States, and Qwest Communications International Inc., the phone company for most of the Rocky Mountain and Northwest regions.

Copyright 2006 The Seattle Times Company Copyright 2006 Associated Press

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