Article: WSJ online.
FCC Votes to Approve
Merger of AT&T, TCI
AT&T, TCI Shareholders
Back the $32 Billion Deal
By MARK WIGFIELD
Dow Jones Newswires
WASHINGTON -- The U.S. Federal Communications
Commission Wednesday approved the $32 billion
merger of the nation's largest long-distance company,
AT&T Corp., and cable giant Tele-Communications Inc.
As expected, the commission didn't require that the new
company give Internet-service providers open access to
its cable system. AT&T plans to offer At Home Corp.'s
Internet service to its cable subscribers, and the
company had opposed open access.
Also as expected, the commission required that TCI
transfer its interest in Sprint PCS to a voting trust prior
to consummation of the deal. The trust will sell the stock
over a period of five years to avoid harming Sprint
PCS's ability to raise capital.
The FCC said it will regulate local telephone service
that AT&T plans to offer via cable like it would any
other competitive telephone service.
Earlier in the day, AT&T said its
shareholders approved the merger.
It said that about 99% of the shares that were voted
approved the merger, and more than 72% of the shares
outstanding were in favor of the transaction.
Later Wednesday, a majority of TCI's shareholders,
meeting in Colorado, approved the deal. The merger
plan must also be approved by local cable-franchising
authorities. Some local authorities want to provide
rivals access to TCI's high-speed lines, but it's unclear if
they would have the authority to force any changes.
In a bold move to expand its reach to new
telecommunications markets, AT&T plans to use TCI's
cable lines to provide local telephone service, as well
as deliver entertainment, high-speed Internet and
long-distance to as many as 33 million households.
AT&T will upgrade TCI's cable to bypass the local Bell
operating companies.
AT&T had argued that the FCC could approve the
merger based on the increased local competition alone.
The new company would offer business services,
residential telephone, cable and wireless services, and
cable television programming.
Rivals Sought Conditions
But some companies and consumer groups saw a threat
in AT&T's promises. They sought several conditions on
the merger, necessary, the groups said, to protect
competition and consumers.
For example, US West Inc. and GTE Corp. consumer
groups and America Online Inc. sought to have the FCC
to impose conditions requiring that AT&T give
competitors equal access to cable for data and Internet
services.
AOL argued that its customers should not have to pay for
At Home if they wanted AOL instead. And GTE said the
new AT&T would be impossible to beat as it bundled
fast Internet with other services.
Long-distance provider MCI WorldCom praised the
merger's ability to boost competition in local markets.
However, it asked the FCC to impose several
conditions, including control of cable rates, to prevent
AT&T from using cable rate hikes to subsidize its entry
into local telephony e AT&T's entry into the local
telephone market.
FCC Overeager?
Other critics felt the FCC was so eager to create local
competition that it simply overlooked the
anticompetitive aspects of the deal.
The FCC "is blind to the fact that it is re-creating the old
AT&T," said telecom attorney Earl Comstock, former
Senate staffer closely involved in the drafting of the
Telecom Act who has represented an AT&T competitor.
But AT&T said requiring open access to cable would be
a deal-breaker.
FCC commissioners at various times said that they
supported open access to cable but preferred to let the
market sort out the issue. However, commissioners have
also said they will keep a close eye on competition for
high-speed Internet and data service. They would
consider regulations in the event of a lack of
competition. Commissioners also indicated the issue
would be better addressed in a broader proceeding
rather than in a two-company merger review.
Wogger |
