SBC, SPRINT, MCI WORLDCOM Seek Conditions on AT&T-TCI Merger
October 30, 1998 1:03 PM
WASHINGTON -(Dow Jones)- Sprint Corp. and
MCI WorldCom Inc. were among the parties that
formally asked the Federal Communications
Commission Thursday to attach conditions to AT&T
Corp. and Tele-Communications Inc.'s planned $31.8
billion merger.
SBC Communications Inc., looking to complete its own
megamerger with Ameritech Corp., Friday endorsed the
AT&T-TCI deal, so long as the FCC requires TCI to
resell and unbundle its cable services and makes sure
competitors have easy access to TCI's cable services.
The FCC is reviewing the AT&T-TCI union, the
SBC-Ameritech deal as well as a third proposed merger
between Bell Atlantic Corp. and GTE Corp. Executives
of the telecommunications companies involved in merger
plans argue that competition in the global marketplace
requires large, well-capitalized companies. These global
companies will reap local benefits because they willl
have the capital to develop new products and even new
local competitive networks.
Thursday, Sprint (FON) said AT&T (T) should be
required to provide competitors fair access to TCI's
(TCOMA, TCOMB) cable facilities when they are used
for local telephone service. AT&T could hurt
long-distance competitors like Sprint by overpricing
access, Sprint said. AT&T also should be prohibited
from tying TCI's cable service with AT&T's
long-distance and other competitive services, it said.
AT&T has said its planned acquisition of TCI is on track
for completion in the first half of next year. AT&T
agreed to the deal in June, promising to upgrade TCI's
cable lines into the equivalent of a local-phone network.
The long-distance giant eventually hopes to use TCI's
lines to transmit everything from interactive TV to local
phone service and Internet access, bypassing the local
Bells and saving billions in "access fees" that it now pays
them to originate and terminate long-distance calls.
Thursday marked the FCC's first deadline for all parties
to comment on the proposed merger, which is subject to
approval by the FCC and the Justice Department. The
FCC is reviewing the merger to determine whether it
serves the public interest, a broad standard that includes
whether it would be good for consumers and for
competition.
If the merged company can prevent other companies
from using TCI's high-speed lines to reach customers,
competition for Internet and phone services could be
crimped, many consumer groups and MCI WorldCom
(WCOM) contested. AT&T and TCI executives have
said they are open to providing other companies with
access to the merged companies' high-speed lines, but
they don't want to be forced to do so by the
government.
MCI WorldCom also wants assurances that when the
merged company provides local phone service over
TCI's cable lines, it will abide by the same regulations as
traditional phone companies. Consumer groups also
want assurances that the merged company won't raise
cable rates to finance its local phone business.
Sprint, meanwhile, asked the FCC to ensure that its own
ability to raise capital isn't hurt by the merger. TCI will
hold about 23% of Sprint's wireless service, Sprint
PCS, after a restructuring of the unit. A sale by
AT&T/TCI of TCI's shares shortly after the
restructuring could make it difficult for Sprint to issue
new stock, the company said. Sprint asked that TCI's
interest in Sprint PCS be placed under the control of an
independent trustee who would oversee an orderly sale
of the stock.
Sprint earlier this week postponed its planned public
offering of its Sprint PCS wireless venture in the face of
a generally unfriendly market. One concern was that
market volatility would frighten off investors and lower
demand for the stock.
The nation's third-largest long-distance company said it
will continue to evaluate market conditions and may
proceed with a public offering of Sprint PCS at a later
date. Sprint had hoped to raise $604 million through an
offering of tracking shares in the unit, but the parent
company would retain total management and board
control.
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