WASHINGTON—Consumer groups and wireless carriers said AT&T Inc.’s proposed conditions to its $79 billion purchase of BellSouth Corp. are inadequate, creating uncertainty over whether the Federal Communications Commission can pull off a planned Nov. 3 vote on the deal.
“AT&T’s concessions are nothing more than short-term candy for a few instead of long-term lower prices and better choices for all consumers. Consumers will still wind up paying inflated prices when these two phone giants merge and dominate local, long distance, wireless and Internet services,” said Gene Kimmelman, senior vice president for Consumers Union.
The FCC twice has postponed votes on the AT&T-BellSouth transaction. The latest delay centered on revelations that AT&T had offered wireless, special-access and net neutrality conditions in response to outreach from FCC staff. FCC Chairman Kevin Martin subsequently put the conditions out for public comment.
In their comments on the transaction, Sprint Nextel Corp. and T-Mobile USA Inc. urged the FCC to strengthen conditions on special-access lines, dedicated links used to carry traffic from a wireless base station to a mobile-switching center and/or onto the public switched telephone network.
In its comments, Clearwire Corp., a wireless broadband firm hungry for more spectrum, asserted “the merged entity will have an enhanced incentive and ability to warehouse and underutilize its 2.5 GHz spectrum.”
Clearwire said the FCC should require BellSouth to divest its 2.5 GHz holdings, echoing the sentiments of consumer advocates and some lawmakers on Capitol Hill.
As part of its proposed conditions, 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 next year, with at least five of the trials conducted in BellSouth’s territory. 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 AT&T-SBC Communications Inc. and Verizon Communications Inc.-MCI Inc. mergers in 2005. Those mergers are currently under review by a federal judge here.
AT&T and BellSouth own 60 percent and 40 percent interests, respectively, in No. 1 cellular carrier Cingular Wireless L.L.C.
Despite all the fireworks, telecom analysts predict the FCC will approve the merger with some conditions next month.
