Washington -- AT&T Corp. and other long-distance
carriers voiced their opposition last week to proposed conditions by the Federal
Communications Commission on the $60 billion merger between SBC Communications Inc. and
The LDCs' markets are substantially protected from Baby
Bell competition, but they said the conditions failed to require SBC and Ameritech to
fully open their markets to competition.
"These conditions have trapdoors," Sprint
Communications Co. executive vice president of legal and external affairs Richard Devlin
In a press release, SBC and Ameritech shot back that the
LDCs were attempting to block competition.
The statement also took direct aim at AT&T's
cable-television-system investments and the company's Internet-access strategy, which has
caused unaffiliated Internet-service providers to seek government intervention at the
state and federal level.
"It's the height of hypocrisy for AT&T to
criticize the SBC and Ameritech merger while creating its second national monopoly this
century and threatening to halt investment in its cable networks if the FCC asks AT&T
to comply with the same laws as SBC and other regional Bells," the one-page statement
The list of 26 conditions would, among other things,
require SBC-Ameritech to invade 30 markets outside of their 13-state region within 30
months or face up to $1.2 billion in fines.
FCC chairman William Kennard pushed for the conditions
after signaling in April that he was unwilling to vote for the merger as originally
But Devlin said many of the conditions designed to protect
competitors from monopoly abuse -- including the creation of a separate affiliate when
offering digital-subscriber-line services -- were not demanding enough on SBC and
"Sprint has concluded that we are better off without
the conditions than with the conditions," he added.
AT&T general counsel Jim Cicconi said he was hopeful
that his company's opposition will convince the FCC to return to the negotiating table.
"We still retain a degree of confidence that the FCC will not accept these
conditions," he said.
MCI WorldCom Inc. vice president of policy and governmental
affairs Jonathan B. Sallet said parties that need FCC merger approval must shoulder the
burden that the merger would serve the public interest. "Promises -- weak promises,
at that -- are simply not enough to carry the legal obligation," Sallet added.
In a letter sent to Kennard last Tuesday and during a
conference, AT&T, Sprint, MCI and others said some of the conditions related to resale
discounts and unbundled elements applied to fewer than 8 percent of the residential lines
in a state. Cicconi called this an attempt "to ration competition."
On the separate-affiliate issue, the long-distance players
said the FCC failed to prevent SBC-Ameritech from giving its DSL affiliate better terms
and condition than DSL competitors seeking to use the Baby Bells' loops to reach
"Right now, it's a sham affiliate," said Russell
Frisby, president of CompTel (the Competitive Telecommunications Association), a group of
350 small and midsized LDCs and competitive local-exchange carriers.
In their statement, SBC and Ameritech said the conditions
go well beyond what it is required by the Telecommunications Act of 1996.
SBC and Ameritech have until today (July 26) to file a
response to their critics with the FCC.