FCC Launches AT&T-MediaOne Review


The Federal Communications Commission announced its next move Wednesday in
connection with suspended merger conditions that apply to AT&T Corp.'s
acquisition of MediaOne Group Inc.

The agency suspended the merger conditions -- one of which required AT&T
to sell its 25 percent stake in Time Warner Entertainment by May 19 -- after a
federal court tossed out one FCC cable-ownership rule on which the merger
conditions were based.

In a public notice, the FCC asked for public comment on the relationship, if
any, between the court decision and the suspended merger conditions. Initial
comments are due May 11 and reply comments May 25.

In the court case, a panel of the U.S. Court of Appeals for the District of
Columbia Circuit ruled that an FCC rule that limited one cable operator to no
more than 30 percent of all pay TV subscribers was unconstitutional under the
First Amendment.

AT&T, which challenged the validity of the rule, was the only cable
operator with more than 30 percent of subscribers after acquiring MediaOne. The
FCC ultimately ordered AT&T to sell its TWE stake to get below 30 percent,
but the agency suspended that action after the March 2 court ruling.

In the notice, the commission generally asks what effect the court ruling had
on the merger conditions and specifically asks whether it should require the TWE
sale despite the court ruling.

Three public-interest and consumer groups, led by Media Access Project, asked
the FCC April 13 to impose the TWE-sale mandate under the agency's duty to
protect the public interest.