AT&T-BellSouth on Indefinite Hold

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The Federal Communications Commission canceled Friday's vote to approve AT&T’s $67 billion merger with BellSouth after agency Democrats demanded more time to study proposed merger conditions.

FCC chairman Kevin Martin -- who is leaving Saturday on a weeklong business trip to Japan and the People's Republic of China -- announced that he would hold the merger vote at the agency's Nov. 3 public meeting if commissioners hadn't already approved the deal by then.

Republicans hold a 3-2 numerical advantage at the commission, but Martin needs the support of one FCC Democrat because Republican commissioner Robert McDowell has so far declined to participate. Before joining the FCC in June, McDowell had been a regulatory attorney at COMPTEL, a trade group made up of members that compete against AT&T and BellSouth and that are challenging the merger.

If the FCC remains deadlocked, McDowell could end up voting if FCC general counsel Sam Feder concludes that McDowell's conflict of interest is outweighed by the public's interest in seeing the FCC complete its review, according to an agency official who asked not to be identified.

The Justice Department approved the merger Wednesday without conditions, angering FCC Democrats Michael Copps and Jonathan Adelstein. In a letter Friday to Martin, Copps and Adelstein said the FCC should allow the public to review and comment on any proposed merger conditions before they are adopted.

Martin, responding by letter within hours, said he would agree to a 10-day public review.

"We are open to discussing with the Democratic FCC commissioners reasonable conditions on the merger in order to obtain unanimous approval, so long as they do not affect our ability to deliver merger benefits to customers and shareowners, given the intensely competitive environment in which we operate," AT&T spokesman Michael Balmoris said.

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