Three vying to buy AT&T divested assets

In a filing this week with the Federal Communications Commission, AT&T revealed that Time Warner Telecom, Level 3 Communications and AboveNet are all vying to buy some of the network assets it is divesting as part of the AT&T-SBC Communications merger.

The information was revealed in a filing on Tuesday in which AT&T is arguing that the FCC should not delay its decision on AT&T’s acquisition of BellSouth until a federal district court has concluded its review of the AT&T-SBC merger under the Tunney Act. That court is looking at whether the Department of Justice agreement with AT&T and SBC, which required the two companies to divest network facilities serving 383 buildings in SBC’s local footprint, is adequate under anti-trust laws.

The DoJ order was based on a finding that the AT&T-SBC merger would lessen competition to those buildings, where the two former rivals provided the only competition.

“Accordingly, the sole issue before the Court under the Tunney Act is the efficacy of the proposed divestiture remedy to restore competition in the 383
buildings where DOJ alleged competitive harm,” AT&T’s filing stated. “Perhaps the best objective evidence of the efficacy of the divestiture remedy is the fact that three sophisticated telecommunications companies have agreed to purchase the divested assets to tie into their existing local networks. AboveNet, Level 3 and Time Warner Telecom not only have signed acquisition agreements but have satisfied the Justice Department that they are ready, willing and able to use those assets to compete with AT&T.”

“Against this backdrop, it is clear that the Commission need not, and should not, allow the Tunney Act proceeding to affect timely resolution of the BellSouth matter,” AT&T’s attorneys argued. They also maintained that the FCC should not halt one transaction based on a review of another, and that the BellSouth acquisition poses much less of a challenge to competition than the AT&T-SBC merger already approved.

The filing is the latest in the flurry of activity in advance of the FCC’s Nov. 3 meeting to discuss the AT&T-BellSouth merger. On Wednesday, 17 Democratic members of Congress from the nine states that BellSouth serves sent a letter to the FCC backing the proposed merger. The letter cited AT&T’s promise to extend broadband to 100% of BellSouth’s territory and to offer naked ADSL service as benefits of the merger.

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