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FCC Delays Vote On AT&T's Deal To Buy BellSouth
By Amy Schatz
The Wall Street Journal
Saturday, October 14, 2006

WASHINGTON -- Bickering at the Federal Communications Commission delayed an expected vote on AT&T Inc.'s acquisition of BellSouth Corp. until at least next month.

The two Democrats on the FCC's five-member board -- Jonathan Adelstein and Michael Copps -- asked for more time Friday to scrutinize the transaction, a reaction to the Justice Department's decision this past week to approve the deal with no conditions. The Justice Department's antitrust review set off consumer advocates, smaller phone companies and congressional lawmakers, mostly Democrats, who complained the merger wasn't in the best interest of consumers and should face at least some conditions.

The Democrats "were ticked off and didn't want to vote," said a person close to the negotiations.

Chairman Kevin Martin rescheduled the vote for Nov. 3.  However, it is likely Messrs. Adelstein and Copps will try to get the vote postponed until after Election Day, which falls four days later.

The FCC is an independent body, but it is overseen by Congress;  if Democrats take control of the House or Senate, they could press the FCC to seek tougher conditions on the AT&T-BellSouth agreement.  The deal was valued at $67 billion when it was announced in March, but AT&T's increased stock price now puts it closer to $80 billion.

The FCC board also contains three Republicans, but one of them, Robert McDowell, is likely to be recused from voting on the deal because of his previous job as an attorney representing smaller phone companies.  San Antonio-based AT&T and BellSouth, of Atlanta, have been pressing for a unanimous vote among the five FCC members who will decide the deal.

To gain the Democrats' votes, AT&T agreed during the week to Mr. Martin's new proposal, which requires AT&T to divest itself about 30 BellSouth buildings in which it provides high-volume business lines.  The company also offered a series of conditions similar to those imposed last year when SBC Communications Inc. merged with AT&T.  Included were a limited price freeze on rates for high-volume business customers;  a requirement that AT&T sell high-speed Internet service by itself, instead of bundling it with other telephone services;  and limited "net neutrality" protections, which would provide some guarantee that Internet traffic wouldn't be blocked.

The company's new proposals "raise a number of significant questions and complex technical issues for us to consider," Messrs. Adelstein and Copps wrote in a letter, asking for a delay.

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