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To: Anthony Wong who wrote (3380)	10/7/1998 10:54:00 AM
From: Anthony Wong	Read Replies (2) \| Respond to of 11568

BT, AT&T to Face EU Scrutiny on Call Capacity, U.K. Dominance Bloomberg News October 7, 1998, 6:28 a.m. ET BT, AT&T to Face EU Scrutiny on Call Capacity, U.K. Dominance Brussels, Oct. 7 (Bloomberg) -- AT&T Corp. and British Telecommunications Plc will have to prove to European Union regulators their planned global venture won't dominate transatlantic call capacity or bar competitors from the U.K. market before it can win EU approval, an EU official said. The official, who asked not to be named, said the venture's share of cables that carry calls between the U.S. and Europe will be the main focus of an EU probe, which hasn't formally begun. The No. 1 U.S. and U.K. phone companies said they'll file the plan to offer voice, data and Internet services to global corporations with EU and U.S. regulators early next month. EU regulators will also examine whether BT's dominant position in the U.K. could stifle competition on the European end of the transatlantic market as more phone companies build global service networks, the official said. Though BT is losing market share, it could potentially limit rival alliances' access to the U.K. market. The venture, announced in July, could face tough antitrust scrutiny on both sides of the Atlantic due to the companies' dominance. Still, BT and AT&T face major competition such as the Global One venture between Sprint Corp., Deutsche Telekom AG and France Telecom SA and the combination of WorldCom Inc. and MCI Communications Corp. Transatlantic capacity was also a focus of the EU probe of BT's proposed acquisition of MCI, derailed last November by a higher bid from WorldCom. BT and AT&T have about 20 percent of the capacity to carry calls across the Atlantic following a recent surge in laying down phone lines, BT said. Asset Sales, Cable The EU official said regulators will take into account the increase in transatlantic call capacity in recent years. He said BT and AT&T must leave enough capacity to ensure rivals can compete against the venture with similar seamless transatlantic networks. Adrian Whitchurch, BT's manager for European regulatory affairs, said in August he doesn't expect the companies to have to sell any of their transatlantic network to win EU approval. EU regulators will also look at the venture's potential dominance of the U.K. cable market, the EU official said. Though AT&T is disappearing from the U.K. market as an independent phone company, its purchase of Tele-Communications Inc. will give it a chunk of the U.K. cable market. Combined with BT's local dominance, AT&T's ownership of a U.K. cable network could give the venture an excessive share of capacity for providing telecommunications services, the official said. A large share of the cable market could also give the venture a competitive advantage in the emerging market for providing digital services across telephone lines, he said. The companies said late last month they're working out details of the venture before filing it with EU regulators and the U.S. Federal Communications Commission and Department of Justice. EU Criteria If the EU review begins early next month, regulators will have to make a ruling by the beginning of December. That deadline could be extended by two weeks if BT and AT&T offer changes to the venture to head off EU objections. If regulators still have serious objections, they can launch an in-depth review that could last up to four more months. The commission can block European operations of ventures between companies with combined global sales of 5 billion European currency units ($5.8 billion) and EU sales of 250 million Ecu each. The commission can effectively veto transactions that result in or strengthen a dominant position in EU markets, even if the companies are from outside the 15-nation EU. --Alison Jahncke in the Brussels bureau (32 2) 285 4300 jl