It’s a done deal.
AT&T Corp.-the nation’s largest long-distance telephone company-and McCaw Cellular Communications Inc.-the biggest cellular operator in the land-are now one.
The two firms closed the $11.5 billion merger Sept. 19, following conditional approval by the Federal Communications Commission earlier the same day. The two companies had set a self-imposed Sept. 30 deadline to complete the largest telecommunications deal in history.
“With the FCC’s approval, AT&T and McCaw have crossed the finish line of a marathon approval process that began when we announced our plans to merge 13 months ago,” stated AT&T.
AT&T is now expected to finish what McCaw began several years ago-purchase Lin Broadcasting Corp. McCaw holds 52 percent of Lin, a major cellular carrier with interests in New York, Houston, Dallas and Los Angeles, and was under contract to either buy the rest of Lin by next year or risk losing all equity in the company.
The completion of the merger, which could unravel if the courts later find it anticompetitive, will likely give AT&T’s long-distance rivals-MCI Communications Corp. and Sprint Corp.-a strong incentive to find a wireless partner before auctions for broadband personal communications services licenses begin in early December.
MCI recently pulled out of a partnership with Nextel Communications Inc., the nation’s largest specialized mobile radio operator, and cable-television giant Comcast Corp.
“We’ll be formidable competitors in wireless too,” predicted Kevin Inda, an MCI spokesman.
The FCC attached various antitrust conditions to its approval, just as the Justice Department did when signing off on the AT&T-McCaw merger in mid-July.
Because AT&T is also a dominant supplier of network equipment to the cellular industry, federal officials want to ensure that McCaw’s competitors are not discriminated against, and that cellular carriers’ proprietary information held by AT&T not be used for anticompetitive purposes.
The commission’s ruling allows McCaw to transfer more than 400 wireless licenses to AT&T, encompassing cellular, paging, microwave, air-to-ground telephone, marine radio, private radio and television operations.
McCaw, which has a license in almost 30 percent of the top 200 U.S. markets and can reach 75 million people with its systems, also owns 32 percent of American Mobile Satellite Corp. and 51 percent of Claircom Communications, an air-to-ground telephone joint venture with Hughes Network Systems Inc.
In addition, McCaw won two nationwide narrowband personal communications service licenses in the July auction.
U.S. District Court Judge Harold Greene, who in late August granted a waiver of the 1982 AT&T breakup decree that allowed the deal to go forward, still must rule on Justice’s merger plan. BellSouth Corp. has challenged Greene’s decision in federal appeals court.
Meanwhile, Nynex Corp. and Bell Atlantic Corp. are seeking a permanent injunction to prevent the merger on antitrust grounds. A trial has been set to begin Nov. 1 in Brooklyn federal court to hear the Bells’ lawsuit.
“This deal continues to have serious antitrust implications despite conditions imposed by the Federal Communications Commission and the Department of Justice,” said James Young, Bell Atlantic vice president and general counsel. “It is anti-consumer, anticompetitive and should not be allowed.”
FCC Chairman Reed Hundt said the commission’s action “will benefit both consumers and the public.”
Some conditions imposed by the FCC are more lenient than those set by Justice, while others parallel the department requirements. For example, the commission did not require AT&T-McCaw to offer customers a choice of long-distance carriers in view of an ongoing FCC proceeding considering whether all commercial mobile radio service providers should be subject to equal access regulations. Justice did impose an equal access requirement.
And while Justice prohibited bundling local and long-distance services by AT&T-McCaw, the FCC did not.
