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FCC pulls AT&T-BellSouth merger vote (again)

Political hot potato

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The Federal Communications Commission today postponed voting on the AT&T BellSouth merger until November.

The FCC represents the last regulatory hurdle for the two telcos to jump over before their $78bn marriage is sealed. The FCC had intended to vote on the matter yesterday and then again today; but the merger has proved to be a political hot potato.

On Wednesday, the Department of Justice waved through the deal, imposing no conditions. It saw no serious competitive issues or consumer harm arising from the merger which sees the company become the incumbent local exchange carrier (ILEC) in 23 states.

The DoJ consent prompted angry releases from Time Warner Telecom and Earthlink, who foresee the AT&T-BellSouth mammoth stomping over their business. It also provoked the ire of the FCC's two Democratic commissioners, Jonathan Adelstein and Michael Copps

In a letter today, they asked their chairman for more time to consider the matter, and to accept further public submissions, before they voted. The time gained would also enable the "applicants to put forward their best proposals."

In a statement today, AT&T said it is "open to discussing with the Democratic FCC Commissioners reasonable conditions on the merger in order to obtain unanimous approval, so long as they do not affect our ability to deliver merger benefits to customers and shareowners, given the intensely competitive environment in which we operate."

The company thinks it has done enough already, but it needs to get this vote through before election time on 7 November. It adds: "We firmly believe, as do three foreign countries, 18 state commissions and the Department of Justice - every regulatory or legal entity that had an obligation to examine the benefits of this merger - that no conditions on this merger are necessary for this combination to be a public benefit.

FCC Chairman Kevin Martin supports the merger, according to Reuters. As one of three Republicans on the Commission he has a majority, on paper, anyway. But fellow Republican Robert Dowell may have to recuse himself from voting, as he used to be a lobbyist for small telcos, fighting their corner against the big carriers. If he's out of the picture, Martin will need to get at least one Democrat to vote with him.

In response to Adelstein and Copp, Kevin Martin today agreed to open the floor to public responses for another 10 days. He said the FCC will vote on the matter on 3 November, if it had not voted before then. ®

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