Merger uncertainty

Approval of the AT&T/BellSouth merger has been postponed until at least Nov. 3, as the FCC tries to decide what conditions to impose to protect the competitive market in the wake of another mega-merger.

The delay, prompted by the two Democratic commissioners, Jonathan Adelstein and Michael Copps, has even prompted hopeful speculation by some opponents that the merger can be derailed. Because Commissioner Robert McDowell is expected to recuse himself from the vote — in light of his pre-FCC lobbying for the competitive service provider industry — FCC Chairman Kevin Martin must convince at least one Democrat to join him and fellow Republican Deborah Tate in approving the merger for it to go through.

“We don't think it's a done deal yet,” said Jonathan Lee, general counsel to CompTel, the trade organization of competitive carriers.

AT&T offered concessions, including freezing prices on DS-1, DS-3 and special access services for 30 months; agreeing to offer “naked” ADSL so consumers could just buy voice over IP separately; and agreeing not to not to seek forbearance from resale rules (as Verizon did, successfully) for 30 months after the merger closes. AT&T also agreed to make broadband service — at a relatively slow 200 kb/s downstream — ubiquitous within BellSouth territory.

Lee and other merger opponents have dismissed AT&T's proposed concessions as “short-term answers to long-term structural changes.”