FCC clears Verizon, SBC purchases
FCC clears Verizon, SBC purchases
Reuters
WASHINGTON - U.S. communications regulators on Monday unanimously approved Verizon Communications' purchase of MCI Inc. and SBC Communications Inc.'s acquisition of AT&T Corp. after intense wrangling over protecting consumers and Internet access.
The Federal Communications Commission voted to clear the deals after days of negotiations over conditions. The two Republican commissioners opposed some of the conditions while the two Democrats on the panel said they did not go far enough.
Verizon is the No. 1 U.S. local telephone company and will acquire the No. 2 long distance carrier MCI for $8.6 billion. SBC , the No. 2 local telephone carrier, is purchasing AT&T , the biggest long-distance company, for $16 billion.
The deals will create two massive telecommunications companies with annual revenues of roughly $90 billion apiece, stakes in the two largest U.S. wireless companies and ambitious plans to expand into subscription television services.
Consumer groups and competitors had warned that the combinations would destroy competition while the companies argued that they faced ample competition from cable companies.
"I do not believe that all of the conditions imposed today are necessary," said FCC Chairman Kevin Martin, a Republican. "Nevertheless, the parties involved have chosen to make these commitments now in order to obtain the certainty of immediate commission approval."
With a Republican seat vacant at the five-member FCC, Martin had to reach a compromise with at least one FCC Democrat or wait for another commissioner.
"More (conditions) would clearly have been better," said Democratic FCC Commissioner Michael Copps. "This is better than approving these mergers without any conditions."
The conditions include requiring Verizon and SBC to offer stand-alone high-speed Internet service as well as provide customers unfettered access to the Internet and give them the ability to use any applications with the high-speed service for two years.
Additionally, the companies committed to not increase prices for some wholesale access to their networks for 30 months and to continue swapping Internet traffic for three years with the same number of providers they do now.
The U.S. Justice Department's antitrust division last week cleared the two transactions on the condition that Verizon and SBC each offer long-term leases to competitors for extra lines into hundreds of buildings across the United States.
The companies must still get approvals from some states.
SBC and Verizon welcomed the FCC votes on their deals that they they see as their best chance to enter the lucrative market for selling services to large corporate clients and winning large government contracts.
"The new company will also have the scale, scope and balance sheet to deliver on its commitments," said Dave Dorman, AT&T chief executive.
"We look forward to delivering the benefits of this transaction to U.S. consumers and the enterprise market as a combined company," said Jim Lewis, MCI senior vice president of policy and planning.
But consumer advocates warned that SBC and Verizon's acquisitions would suffocate competition for customers, lead to higher prices and poorer service.
"Approval of these mergers undermines more than 20 years of efforts to introduce competition into the residential local and long distance telecommunications market," said Gene Kimmelman, senior director of public policy for Consumers Union.
Competitors like Qwest Communications International Inc. and others had urged the FCC to set tougher conditions on the acquisitions, such as asset sales and price controls.
"It appears that the FCC has imposed critical protections that will prevent the two mega-firms from increasing the prices or decreasing the quality of essential services they provide to competitors," Qwest said in a statement.
(With additional reporting by Justin Hyde and Peter Kaplan)
Copyright 2005 Reuters News Service. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Copyright © 2005 ABC News Internet Ventures
http://abcnews.go.com/Business/wireStory?id=1267172
Reuters
WASHINGTON - U.S. communications regulators on Monday unanimously approved Verizon Communications' purchase of MCI Inc. and SBC Communications Inc.'s acquisition of AT&T Corp. after intense wrangling over protecting consumers and Internet access.
The Federal Communications Commission voted to clear the deals after days of negotiations over conditions. The two Republican commissioners opposed some of the conditions while the two Democrats on the panel said they did not go far enough.
Verizon
The deals will create two massive telecommunications companies with annual revenues of roughly $90 billion apiece, stakes in the two largest U.S. wireless companies and ambitious plans to expand into subscription television services.
Consumer groups and competitors had warned that the combinations would destroy competition while the companies argued that they faced ample competition from cable companies.
"I do not believe that all of the conditions imposed today are necessary," said FCC Chairman Kevin Martin, a Republican. "Nevertheless, the parties involved have chosen to make these commitments now in order to obtain the certainty of immediate commission approval."
With a Republican seat vacant at the five-member FCC, Martin had to reach a compromise with at least one FCC Democrat or wait for another commissioner.
"More (conditions) would clearly have been better," said Democratic FCC Commissioner Michael Copps. "This is better than approving these mergers without any conditions."
The conditions include requiring Verizon and SBC to offer stand-alone high-speed Internet service as well as provide customers unfettered access to the Internet and give them the ability to use any applications with the high-speed service for two years.
Additionally, the companies committed to not increase prices for some wholesale access to their networks for 30 months and to continue swapping Internet traffic for three years with the same number of providers they do now.
The U.S. Justice Department's antitrust division last week cleared the two transactions on the condition that Verizon and SBC each offer long-term leases to competitors for extra lines into hundreds of buildings across the United States.
The companies must still get approvals from some states.
SBC and Verizon welcomed the FCC votes on their deals that they they see as their best chance to enter the lucrative market for selling services to large corporate clients and winning large government contracts.
"The new company will also have the scale, scope and balance sheet to deliver on its commitments," said Dave Dorman, AT&T chief executive.
"We look forward to delivering the benefits of this transaction to U.S. consumers and the enterprise market as a combined company," said Jim Lewis, MCI senior vice president of policy and planning.
But consumer advocates warned that SBC and Verizon's acquisitions would suffocate competition for customers, lead to higher prices and poorer service.
"Approval of these mergers undermines more than 20 years of efforts to introduce competition into the residential local and long distance telecommunications market," said Gene Kimmelman, senior director of public policy for Consumers Union.
Competitors like Qwest Communications International Inc.
"It appears that the FCC has imposed critical protections that will prevent the two mega-firms from increasing the prices or decreasing the quality of essential services they provide to competitors," Qwest said in a statement.
(With additional reporting by Justin Hyde and Peter Kaplan)
Copyright 2005 Reuters News Service. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Copyright © 2005 ABC News Internet Ventures
http://abcnews.go.com/Business/wireStory?id=1267172
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