bristle at FCC chief's enforcement of AT&T-BellSouth merger
By Paul Davidson
Friday, February 2, 2007
The chairman of the Federal Communications Commission faced
tough questions from a Senate panel Thursday over his
comments that he would not enforce a key condition the FCC
imposed before approving of the AT&T-BellSouth merger.
At a Senate Commerce Committee hearing Thursday, Committee
Chairman Daniel Inouye, D-Hawaii, suggested FCC Chairman
Kevin Martin, a Republican, did not intend to "stand by the
deal" and that he was obliged to withhold his vote and
negotiate further if he had concerns about any of the
The $86 billion merger — the largest in telecom history —
was approved in December by a 4-0 vote after weeks of
negotiations between the commission's two Democrats and two
The condition in question would require the combined company
to slash the rates it charges competitors and big businesses
to lease private, high-speed data lines in deregulated
It was among a laundry list of concessions pushed by the
FCC's two Democrats to win their votes, and it stands to
have perhaps the biggest impact on AT&T's bottom line,
costing it a projected $500 million over four years.
But in agreeing to the requirement, AT&T said it would not
slash the prices it charges Verizon and Qwest, two of its
largest rivals, unless the two local phone giants lower the
lease rates they charge AT&T in their territories. AT&T,
Verizon and Qwest all have long-distance units that serve
big businesses outside their regions.
Verizon and Qwest say they will not cut their prices for
In a statement released when the FCC approved the deal,
Martin and Republican Commissioner Deborah Tate suggested
they would not enforce the condition because it improperly
imposed obligations on other carriers. They also said if
Verizon and Qwest can't get the low rates, the concession
would conflict with FCC rules that require wholesale
services to be offered to all carriers on equal terms.
On Thursday, Martin told Inouye he was abiding by the deal
but that while AT&T could submit tariffs, which are legal
documents detailing its reduced prices, he would not approve
"You're not allowed to discriminate among the different
companies in terms of who you offer discounted prices to,"
Martin said. "Where the commission would have to take
affirmative action, we said no, we would have hesitation
Democratic Commissioner Jonathan Adelstein told lawmakers he
was unaware of Martin's concerns until after the vote.
"It's hard for me to understand how we cannot implement
something that was (voted for) unanimously," he said.
He also said FCC rules bar only unreasonable price
discrimination and that offering different prices in this
case would be "reasonable."
In a letter to Martin on Wednesday, Reps. John Dingell, D-Mich.,
and Ed Markey, D-Mass., also pressed him about his
comments. He's expected to be grilled about them again at a
House hearing Markey will chair on Feb. 15.