WASHINGTON-The proposed marriage between Bell Atlantic Corp. and GTE Corp. was met with skepticism from Washington telecommunications policy makers, most of whom do not believe the companies’ claims that the merger will lead to more competition.
The pre-eminent telecom policy maker, William Kennard, chairman of the Federal Communications Commission, released a statement suggesting as much. “I hope the parties will demonstrate how this merger advances the pro-competitive thrust of the Telecommunications Act,” Kennard said.
The marriage, worth at least $52.5 billion, would create a telecommunications giant with a presence in 40 states. It would top the merger between SBC Communications Inc. and Ameritech Corp. announced in May. The two mergers, along with an announced alliance between AT&T Corp. and British Telecommunications plc, show the telecom industry is moving toward more consolidation, not more competition, many policy makers said.
Indeed, Sen. Patrick Leahy (D-Vt.), the ranking Democrat on the Judiciary Committee, used the Bell Atlantic/GTE announcement as an opportunity to press again for his proposed legislation that would limit the FCC’s discretion in these mergers until competition is more firmly in place. “The bill that I have introduced to govern mergers like this one would block it unless the Attorney General makes a positive finding that [it] would promote competition, and unless the [FCC] certifies that both firms have opened their networks for local competition in each state that they serve,” Leahy said.
Leahy’s view is considered extreme by many insiders, but they predict that the FCC will extract some agreements from the companies before approving the merger. When Bell Atlantic proposed to merge with Nynex Corp., a merger completed about a year ago, the FCC negotiated so-called local competition commitments that require the company to submit quarterly reports measuring local competition. Once this commitment was made, the FCC approved the merger.
FCC approval is important to wireless concerns because the FCC must give its blessing before the new entity, which has yet to be named, could take control of the radio licenses of the two companies.
Once the Bell Atlantic/GTE merger is complete, it is estimated the new company would control roughly 20 percent of the U.S. wireless market. Company executives rebuffed questions that they would have to divest the wireless business because of the relationship between Bell Atlantic and PrimeCo Personal Communications L.P. “There are some overlaps, but in our core cellular business there is an overlap of less than 1 million pops. We feel confident” that the new company will not have to divest, said Charles R. Lee, chairman and chief executive officer of GTE.
Lee is expected to become chairman and co-CEO-along with Ivan Seidenberg of Bell Atlantic-of the merged company. Seidenberg currently is Bell Atlantic’s CEO.
The merged companies will be filing the necessary paperwork at the FCC, the Department of Justice and at state regulatory agencies within the next two months, Seidenberg said at a New York press conference. While there was no reason given for the delay, some Washington insiders speculated the companies may be taking a “wait and see” approach before asking for the FCC’s blessing.
Additionally, the FCC reportedly is considering whether to lift the spectrum caps that limit any one company to 45 megahertz of spectrum in a given area. The FCC’s Wireless Telecommunications Bureau is reviewing this as part of its biennial review but does not have a time line for when it would send up such a proposal to be considered by the FCC commissioners. If the spectrum cap was lifted, it would make approval-at least on the wireless front-much easier.
