WASHINGTON-AT&T Inc. offered to conduct a series of wireless broadband trials as part of a package of concessions aimed at winning Federal Communications Commission approval of its proposed $79 billion purchase of BellSouth Corp.
AT&T said the newly merged company would launch 10 trials of wireless broadband Internet service in the 2.3 GHz and 2.5 GHz bands by the end of 2007, with at least five of the trials conducted in BellSouth’s territory. BellSouth already offers wireless broadband services using its 2.3 GHz spectrum holdings in a handful of southeast markets.
AT&T also promised to donate $1 million to further public-safety communications. The conditions on special-access lines proposed by AT&T are similar to those imposed by the FCC and Justice Department on the SBC Communications Inc.’s acquisition of AT&T Corp. and Verizon Communications Inc.’s acquisition of MCI Inc. in 2005. Those deals are currently under review by a federal judge.
AT&T and BellSouth argue they should not be forced to divest wireless broadband spectrum, given the availability of frequencies and control of such spectrum by competitors-particularly Sprint Nextel Corp.
Sprint Nextel has a virtual nationwide footprint of wireless broadband spectrum at 2.5 GHz. As such, the FCC set certain service requirements in approving Sprint Corp.’s purchase of Nextel Communications Inc. in 2005. The first milestone requires Sprint Nextel to offer service using 2.5 GHz spectrum to at least 15 million Americans within four years and to serve an additional 15 million citizens within six years.
AT&T’s proffer was submitted to the FCC after the two Democratic commissioners and telecom firms raised questions about 11th-hour merger negotiations that AT&T said were initiated by Chairman Kevin Martin’s staff and Thomas Navin, chief of the commission’s wireline bureau.
Martin lacks leverage he normally would have as chairman of the five-member, GOP-led FCC. Commissioner Robert McDowell, a Republican, has removed himself from merger consideration due to conflict-of-interest considerations related to prior work as a lobbyist at a telecom association whose members compete against Bell telephone companies.
The FCC recently postponed votes on the AT&T-BellSouth deal, first on Oct. 12 and then the following day when the proceeding came totally unhinged after Democratic Commissioners Michael Copps and Jonathan Adelstein asked Martin to halt the second planned vote and put AT&T’s plan out for public comment. Martin agreed, directing parties to provide feedback on AT&T’s proposed acquisition conditions by Oct. 24. Martin said the FCC could vote on the deal at the open meeting on Nov. 3, just days before midterm elections in which Democrats hope to reclaim the House and possibly the Senate.
Telecom analysts, who predict the AT&T-BellSouth hook-up eventually will win backing from the FCC with conditions similar to those attached to previous telecom mega-mergers, have speculated approval of the deal could get complicated if Democrats win one or both houses of Congress. If given the green light, control of No. 1 wireless operator Cingular Wireless L.L.C.-currently jointly held by AT&T and BellSouth-would be consolidated under one owner.
Consumer groups, Democratic lawmakers, Sprint Nextel, Clearwire Corp. and others have urged the FCC to impose conditions on wireless broadband spectrum, special-access lines and aspects of the deal as prerequisites to clearing the transaction. That is why some parties vented such anger when the Justice Department on Oct. 11 consented to the AT&T-BellSouth deal without attaching any conditions. Copps and Adelstein were especially critical of the DoJ’s handling of the proposed transaction.
While consumer groups and others applauded the FCC’s decision to temporarily delay the vote on the AT&T-BellSouth deal, key Republicans on Capitol Hill voiced serious concern about potential repercussions of dragging the matter out.
“After a rigorous and thorough review, I am disappointed with the FCC’s inability to reach a consensus on the AT&T, BellSouth partnership. The Justice Department recognized that the merger of AT&T and BellSouth is good for American consumers, and now it is time for the FCC to follow suit,” said Rep. Fred Upton (R-Mich.), chairman of the House Commerce telecom and Internet subcommittee. “Markets are changing rapidly, and as new technologies and services come online, it is the consumer that bears the burden as the merger application is further delayed. The ultimate decision by the FCC should be based on the merits rather than politics, and I’d like to think at the end of the day, the commission will come together and finalize the deal. The clock is ticking and the economic consequences of the FCC’s continued inaction will be severe.”
The chairman of House and Senate commerce committees also decried the two postponed FCC votes on the AT&T-BellSouth deal.
“AT&T and Bellsouth filed an application for transfer of control on March 31, 2006. More than six months have now transpired since that application was filed. The Federal Communications Commission has conducted a thorough review of the pro-competitive benefits presented by AT&T’s acquisition of BellSouth and has a complete record of comments from interested parties. In fact, at least 60 entities filed more than 10,000 initial and almost 600 reply comments.
“We are concerned by the commission’s failure to act on the application this week after such a thorough review and a complete record,” said Rep. Joe Barton (R-Texas) and Sen. Ted Stevens (R-Alaska). “We certainly hope that the delays requested by members of the commission are substantive in nature, although the commission has had ample time to debate the merits of AT&T’s acquisition of BellSouth. The commission has a responsibility to act expeditiously on the AT&T-Bellsouth application so that consumers will have an opportunity to reap the benefits that will emanate from a stronger video and broadband provider in BellSouth’s nine-state region.”
