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AT&T deal could get approved today
[December 29, 2006]

AT&T deal could get approved today

(San Antonio Express-News (KRT) Via Thomson Dialog NewsEdge) Dec. 29--San Antonio-based AT&T Inc. late Thursday offered new concessions aimed at breaking a months-long logjam on the Federal Communications Commission, potentially allowing the company to complete its $85 billion takeover of BellSouth Corp. before the new year.

The concessions could set the stage for the FCC, which several times has delayed a vote on the merger, to approve it as early as today.

While there are no guarantees the commission, split 2-2 along party lines, will move that quickly to break its stalemate, observers said such a move is likely to happen by the end of the year.

"I'd be real surprised not to see a vote (today)," said Ben Scott, policy director for Free Press, a watchdog group that pushed for strong conditions on the transaction.

Over the last week, the commission has been the center of a "furious round of calls and letters," Scott said, as the company and opponents negotiated on the conditions. More information Document: AT&T's latest offer of concessions

The concessions in AT&T's 20-page filing include a promise that the company would abide by so-called "network neutrality" principles that would require it to treat all Internet companies' network traffic equally and that it would sell off some wireless spectrum to competitors.

The filing also promises the company would offer high-speed DSL Internet service to residential customers for less than $20 a month -- a proposal championed by consumer groups.

The FCC is the final regulatory body that must approve the AT&T-BellSouth deal.

FCC Chairman Kevin Martin and fellow Republican Deborah Taylor Tate are eager to approve the merger, one of the largest telecom deals in history.

However, Democrats Jonathan Adelstein and Michael Copps have asked the company to offer price controls and other concessions aimed at protecting consumers and competitors.

AT&T officials were unavailable for comment Thursday evening, as were officials representing the FCC commissioners.

AT&T filed the new set of conditions 10 days after Republican Commissioner Robert McDowell said he wouldn't participate in the deal, despite authorization from the commission's general counsel for him to break the tie. McDowell had recused himself from the vote because he had lobbied for a trade association opposed to the merger.

The new, more stringent net neutrality conditions came as a surprise to some observers.

AT&T had previously argued that it should be allowed to charge Internet companies like Yahoo or Google to pay more for faster delivery of their content. Consumer groups and the tech industry have lobbied the FCC and Congress to hold the company to net neutrality principles, saying its plan would create a two-tiered Internet and stifle innovation by smaller companies.

"There wasn't anybody who thought this deal wouldn't go through, but I do think some people will be surprised that they offered up these net neutrality conditions," Frost Bank analyst Le Keough said.

"This definitely sounds like a pretty serious concession from AT&T. They're giving up a potential revenue stream from their network."

Consumer groups praised the concessions, saying they would safeguard the freedom of the Internet and consumer choice.

"These have been some hard-fought negotiations over important consumer issues," said Mark Cooper, director of research for the Consumer Federation of America. "That's what you can put on my tombstone."

AT&T wants to buy Atlanta-based BellSouth to compete with cable companies like Time Warner that have chipped away at its phone business.

Key to that plan is consolidating its ownership of Cingular Wireless, the cellular company it currently co-owns with BellSouth.

The merged company will be headquartered in San Antonio, but Cingular -- which is likely to be given the AT&T moniker -- will continue to be based in Atlanta.

AT&T and BellSouth announced their deal in March, and officials have said they expected it to close by the end of the year.

The companies also are eager to close a deal before the new Democratic-controlled Congress -- generally considered less friendly to large corporate mergers than previous Republican-led bodies -- convenes next year.

"It will be interesting to see how fast they can manage to get this thing closed once it's approved," Frost Bank's Keough said.

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