FCC Staff, SBC, Ameritech Agree on Merger Conditions Creating Major Consumer Benefits
Comprehensive Set of Conditions Will Open Local Markets, Help Competitors and Bridge the Digital Divide
SAN ANTONIO--(BUSINESS WIRE)--June 29, 1999-- Consumers will benefit from more local phone competition and broad deployment of advanced services if the SBC-Ameritech (NYSE:SBC - news; NYSE:AIT - news) merger is approved under conditions proposed today by the companies and staff of the Federal Communications Commission.
The 28 conditions were agreed upon after 12 weeks of discussions between the companies and FCC staff. The full commission is expected to put the conditions out for public comment and subsequently rule on the merger soon.
The package contains a sweeping array of conditions that will make SBC-Ameritech's markets the most open in the nation, boosting local competition by providing competitors with the nation's steepest discounts for resold local service and full access to operating support systems. It also requires SBC to accelerate by six months its entry into new markets, so that the company will compete in 30 new markets within 30 months after the merger closes. In addition, SBC will establish a separate subsidiary to provide advanced services such as high-speed Internet access via ADSL. Also, SBC will not charge its residential customers minimum monthly long-distance fees for at least three years after it enters the long-distance market.
The conditions also require stringent performance monitoring, reporting and enforcement provisions that could trigger more than $2 billion in payments by the company if certain goals are not met.
''This merger puts consumers first,'' said SBC Chairman and CEO Edward E. Whitacre Jr. ''We're joining with Ameritech to keep up with the competition and keep ahead of our customers' telecommunications needs. And through these conditions, we're putting that commitment in writing.''
Talks between the parties began in April, after FCC Chairman William Kennard invited the companies to discuss his concerns regarding the merger's potential impact on competition and consumers.
''We believe we've satisfied each of the Chairman's concerns in detail,'' said Richard C. Notebaert, chairman and CEO of Ameritech. ''Our companies have gone through an unprecedented and exhaustive level of review. The net result is a set of conditions that are reasonable and fair for consumers, for competitors and for the companies.''
Highlights of the conditions include commitments to:
1. Boost local residential competition by providing steep promotional
discounts to competitors of up to 32% for resold service and 25%
for leasing unbundled loops the wires from the companies'
switching centers to the customer's home. Also, the companies
will offer the so-called unbundled network element platform to
competitors serving residential customers.
2. Streamline the combined companies' Operating Support Systems
interfaces across all 13 states to enhance the opening of local
phone markets to competition by allowing competitors to swiftly
and efficiently order services and network facilities
electronically. The combined companies risk FCC penalties of
more than $100,000 per day for failing to meet these
obligations.
3. Enter and compete in 30 markets outside the companies' combined
13-state territory on a facilities-basis, for residential and
business customers, within 30 months after the merger closes or pay
$40 million for each market missed, for a total liability of $1.2
billion. Under the companies' previously announced National Local
plan, they would have entered these markets within 36 months.
4. Bridge the ''Digital Divide'' by making advanced services such as
high-speed Internet access via ADSL broadly available, with a
special emphasis on low-income urban and rural areas. Also,
competitors who resell SBC's ADSL service will be offered a 50%
discount on local residential loops that are used exclusively for
ADSL.
5. Create a separate subsidiary to provide advanced services such as
high-speed Internet access via ADSL service.
6. Charge no minimum monthly fee for at least three years in
providing long distance service to residential customers in the
SBC-Ameritech states or any other market in which SBC will compete
under their National Local plan.
7. Implement a series of performance measures and benchmarks
covering 20 key areas in the 13 SBC-Ameritech states to ensure
that the merged company provides services to competitors in
parity with the service it provides to its retail customers,
under threat of up to $1 billion in payments over three years.
8. Boost local competition by providing specialized training on
working with SBC's systems for smaller competitors.
9. Enhance local competition by bringing Ameritech in line with SBC's
position on provisioning and billing for shared transport.
10. Extend Lifeline programs for low-income consumers across the SBC-
Ameritech 13-state territory.
''As consumer-focused and broad-based as these conditions are, competitors like AT&T and MCI WorldCom will undoubtedly do their best to find fault,'' said Notebaert. ''Their goal has always been to keep new competitors out of the market -- and in the process, they have placed their corporate self interests ahead of consumers' interests.''
''Over the last three months, we've worked hard to create conditions that the FCC can endorse,'' said Whitacre. ''The merger has cleared the Justice Department, we have earned the approval of Ohio regulators, and Illinois Hearing examiners have recommended approval. American consumers will soon have a new telecommunications choice, and we're ready to begin.
''FCC Chairman Kennard has said before a merger may be approved it must promote competition, foster innovation and protect consumers. These conditions ensure those results,'' said Whitacre.
The SBC-Ameritech merger has received clearances from the Department of Justice and European regulators and Ohio regulators. It has won the support of more than 200 business leaders, industry analysts, elected officials and consumer and civic leaders, including Rainbow PUSH and the U.S. Hispanic Chamber of Commerce. The merger is also endorsed by the American Federation of Labor and Congress of Industrial Organizations, the Chicago Federation of Labor, the International Brotherhood of Electrical Workers, and the Communications Workers of America. It is also supported by newspapers around the Ameritech region.
SBC Communications Inc. (www.sbc.com) is a global leader in the telecommunications industry, with more than 37.7 million access lines and 7.2 million wireless customers across the United States, as well as investments in telecommunications businesses in nine other countries. Under the Southwestern Bell, Pacific Bell, SNET, Nevada Bell and Cellular One brands, SBC, through its subsidiaries, offers a wide range of innovative services. SBC offers local and long-distance telephone service, wireless communications, data communications, paging, Internet access, and messaging, as well as telecommunications equipment, and directory advertising and publishing. SBC has more than 130,000 employees and its annual revenues rank it in the top 50 among Fortune 500 companies.
Ameritech (NYSE:AIT - news) serves millions of customers in 50 states and 40 countries. Ameritech provides a full range of communications services including local and long-distance telephone and data, cellular, paging, security, cable TV, Internet and more. One of the world's 100 largest companies, Ameritech (www.ameritech.com) has 70,000 employees, 1 million shareowners and $30 billion in assets.
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Contact:
SBC Contact: or Ameritech Contact:
Selim Bingol Lisa Kim
Tel: 210/351-3991 Tel: 312/220-2377
Pager: 800/517-7022 Pager: 800/800-9725
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