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To: Jake0302 who wrote (3092)	7/30/1998 10:30:00 PM
From: Anthony Wong	Read Replies (4) \| Respond to of 11568

FCC Chairman said FCC would likely rule on WorldCom Inc./MCI merger by the end of August:- SBC, Ameritech Merger Faces Hurdle, FCC Chairman Says (Update1) Bloomberg News July 30, 1998, 5:55 p.m. ET SBC, Ameritech Merger Faces Hurdle, FCC Chairman Says (Update1) (Adds analyst comment, additional Kennard comments) Washington, July 30 (Bloomberg) -- Federal Communications Commission Chairman William Kennard said SBC Communications Corp. and Ameritech Corp. haven't clearly shown the agency how their combination will promote competition and benefit consumers in their regions, which is what the FCC will look for when it decides whether to approve the combination. ''One of the things SBC and Ameritech have told us is that 'we're prepared to demonstrate we'll bring more competition outside of our region.' But I haven't heard them say they're going to do things to bring more competition in their regions,'' Kennard said in an interview. San Antonio, Texas-based SBC announced May 11 its $69.6 billion purchase of Chicago-based Ameritech. The FCC will look at whether the transaction is in the ''public interest,'' while the U.S. Justice Department will review whether it violates antitrust laws. Kennard said the two companies have a ''very heavy burden to show that this merger is pro-competitive.'' George Reed Dellinger, an telecommunications analyst with HSBC Washington Analysis, said SBC and Ameritech are ''trying to wrap themselves in the pro-competitive theory that has no empirical evidence today.'' None of the Bells are aggressively entering the local phone market outside of their territories, he said. If anything, the transaction will result in the elimination of plans to compete against each other, he said. ''The issue is always the competitive impact in the relevant market, and the relevant market has always been the SBC and Ameritech territory,'' added Paul Glenchur, a telecommunications analyst with Charles Schwab & Co.'s Washington Research Group. Approval Not a Given Kennard also said he was perplexed by analysts' and pundits comments that because the agency approved Bell Atlantic's purchase of Nynex Corp. last year, it's not likely to block any subsequent Bell merger. ''That doesn't make any sense to me,'' said Kennard. ''First of all, it ignores the fact that in the Bell Atlantic-Nynex order itself, it laid down a pretty clear line that said, 'whoa-- we're going to take a really hard look at any further combinations in this area.' '' Kennard added: ''The more mergers you approve, the more concentration you have, and it becomes more and more problematic,'' he said. Kennard wouldn't provide a time frame on when the agency would rule on the SBC-Ameritech transaction. He said the agency would likely rule on WorldCom Inc.'s $49 billion purchase of MCI Communications Corp. by the end of August. The U.S. Justice Department and European Union have already approved the transaction. Reviewing Telecommunications Act When Congress passed sweeping telecommunications reform legislation in 1996, no one expected the massive amount of consolidation in the telecommunications and broadcasting industries that's come about. On the telecommunications front, the seven Baby Bell phone companies created by the break-up of AT&T Corp. in 1984 have dwindled to five -- Bell Atlantic Corp. purchased Nynex Corp., and SBC purchased Pacific Telesis Group. If the SBC-Ameritech transaction goes through, there'll be only four Bells left -- SBC, Bell Atlantic, BellSouth Corp. and US West Inc. Earlier this week, Bell Atlantic and GTE Corp. announced a $68.6 million merger. That transaction is expected to undergo tough regulatory scrutiny. Kennard wouldn't comment specifically on any of the combinations. Instead, he focused on the need for the agency to ''take a hard look at all of these transactions to see if they can fit within the pro-competitive thrust'' of the 1996 Telecommunications Act. ''I don't think anyone predicted the massive amount of consolidation that would be proposed in the wake of that act. I don't think most members of Congress did, I don't think most members of the FCC did,'' said Kennard. ''The act was not about consolidation, it was about competition,'' he said. Still, it's too early to talk about revamping the law, Kennard said. ''We're less than three years into this act. So, let's not rush to conclusions,'' he said. --Heather Fleming in Washington, (202) 624-1835/mmw