FCC Approves of Mergers

[David Farber <dave () farber net>]

Begin forwarded message:

From: Robert Cannon <rcannon100 () YAHOO COM>
Date: October 31, 2005 3:54:47 PM EST
To: CYBERTELECOM-L () LISTSERV AOL COM
Subject: FCC Approves of Mergers
Reply-To: Telecom Regulation & the Internet <CYBERTELECOM- 
L () LISTSERV AOL COM>

FOR IMMEDIATE RELEASE:  NEWS MEDIA CONTACT:
October 31, 2005        Mark Wigfield, 202-418-0253
        Email:  mark.wigfield () fcc gov


FCC APPROVES SBC/AT&T AND VERIZON/MCI MERGERS
Transactions Offer Significant Public Interest
Benefits
Washington, D.C. – The Federal Communications
Commission today approved the mergers of SBC
Communications Inc. with AT&T Corp. and Verizon
Communications Inc. with MCI, Inc.
The Commission concluded that consumers will reap the
rewards of the public interest benefits that will flow
from these mergers.  These benefits include
integration of complementary networks, which will
increase efficiency and provide consumers with new
services and improved network performance and
reliability.  The mergers will create stable, reliable
U.S.-owned companies that will provide improved
service to government customers and benefit national
defense and homeland security.  In addition, the
mergers will give the companies increased economies of
scale and scope, which should increase their
incentives and resources to engage in basic research
and development.  Finally, the mergers should result
in substantial cost savings, which should benefit
consumers throughout the country.
The Commission’s analysis of the competitive effects
of the mergers focused on six key services.  They are:
•       Special access competition:  The Commission found
that, in a limited number of buildings where AT&T (in
SBC’s territory) and MCI (in Verizon’s territory) is
the only competitive carrier with direct connections,
the mergers could have an anticompetitive effect on
wholesale special access services that are provided
entirely over a single carrier’s facilities.  The
Commission found, however, that the Consent Decrees
entered into on Oct. 27 between the U. S. Department
of Justice and the applicants adequately address this
potential harm.  The Commission further found that the
mergers are not likely to result in anticompetitive
effects with respect to other special access services
that combine one carrier’s own facilities with those
of another.
•       Retail enterprise competition:  The Commission found
that the mergers are not likely to result in
anticompetitive effects for medium and large
enterprise customers because these customers are
sophisticated, high-volume purchasers of
communications services and because a significant
number of carriers will continue to compete in the
market.
•       Mass market competition:  The Commission found that
the mergers are not likely to result in
anticompetitive effects for mass market customers
because AT&T has ceased marketing those services and
is gradually withdrawing from that market, while MCI
has significantly reduced its marketing.  The
Commission further found that facilities–based
intermodal competition, including cable VoIP and
wireless services, is growing rapidly and will play an
increasingly important role with respect to future
mass market competition.
•       Internet backbone competition:  The Commission found
that the mergers are not likely to result in
anticompetitive effects in the Internet backbone
market.  It found that the mergers are not likely to
cause the Internet to tip into monopoly or duopoly, or
to give the merged entities the incentive or ability
to tip the market to monopoly, increase prices to
supra-competitive levels, or reduce service quality.
•       Wholesale interexchange (long distance) competition:
 The Commission found that the market is likely to
remain competitive after the mergers, due primarily to
the presence of numerous competitive nationwide fiber
networks with excess capacity.
•       International competition:  The Commission found
that the mergers are not likely to result in
anticompetitive effects for mass market, enterprise or
global telecommunications customers.
•       Public Interest Benefits.  Among the many public
interest benefits, the Commission specifically
recognized the applicants’ progress implementing the
Commission’s VoIP 911 requirements for interconnected
VoIP providers.
The Commission also adopted in the Order as
enforceable conditions certain voluntary commitments
made by the applicants.
•       The applicants committed not to seek an increase in
state-approved rates for unbundled network elements
(UNEs) for two years (except for rates that are
subject to current appeals in specific states).
•       The applicants committed to a one-time recalculation
to exclude fiber-based collocation arrangements
established by AT&T in SBC’s region and MCI in
Verizon’s region in identifying wire centers in which
SBC or Verizon claims there is no impairment pursuant
to the UNE triggers in the Triennial Review Remand
Order so that dedicated transport and/or high-capacity
loops need not be unbundled.
•       The applicants committed to implement a “Service
Quality Measurement Plan,” which will provide the
Commission with quarterly performance results for
interstate special access services.  This commitment
will terminate the earlier of 30 months and 45 days
after the beginning of the first full quarter
following the closing of the mergers, or the effective
date of a Commission order adopting general special
access performance measurement requirements.
•       The applicants committed, for 30 months, not to
increase the rates paid by existing in-region
customers of AT&T in SBC’s region or MCI in Verizon’s
region for wholesale DS1 and DS3 local private line
services.
•       SBC/AT&T and Verizon/MCI committed, for a period of
30 months, not to provide special access services to
themselves, their interexchange affiliates, or each
other or their affiliates, that are not generally
available to other similarly situated customers.
•       The applicants committed that for a period of 30
months, before they provide new or modified contract
tariffed service to their own section 272(a)
affiliate(s), they will certify to the Commission that
they provide service pursuant to those contract
tariffs to unaffiliated customers other than each
other or their wireline affiliates.
•       The applicants committed for a period of 30 months
not to increase rates set forth in SBC’s and Verizon’s
interstate tariffs for special access services,
including contract tariffs, that they provide in their
in-region territory that are on file with the
Commission on the Merger Closing Dates, unless those
tariffs expire by their own terms before the end of
the period.
•       The applicants committed, for a period of three
years, to maintain settlement-free peering
arrangements with at least as many providers of
Internet backbone services as they did in combination
on the Merger Closing Dates.
•       The applicants committed for a period of two years
to post their peering policies on publicly accessible
websites.  During this two-year period, the applicants
will post any revisions to their peering policies on a
timely basis as they occur.
•       SBC/AT&T acknowledged:  (1) that the merger does not
change carrier of last resort obligations imposed by
the State of Alaska on interexchange services provided
by Alascom; (2) that the merger will not alter
statutory and regulatory geographic rate averaging and
rate integration rules that apply on the merger
closing date to Alascom; and (3) after the merger
closing date, they will operate Alascom as a distinct,
though not structurally separate, corporate entity.
•       The applicants committed to provide, within 12
months of the Merger Closing Dates, DSL service to
in-region customers without requiring them to also
purchase circuit-switched voice telephone service.
The companies will make the offering for two years
from the time it is made available in a particular
state.
•       The applicants committed for a period of two years
to conduct business in a way that comports with the
Commission’s Internet policy statement issued in
September.
•       Finally, the applicants committed to file annual
certifications that they are complying with these
enforceable commitments.

Action by the Commission October 31, 2005, by
Memorandum Opinion and Order (FCC 05-183).  Chairman
Martin and Commissioner Abernathy, with Commissioners
Copps and Adelstein concurring.   Separate statements
issued by Chairman Martin, Commissioners Abernathy,
Copps, and Adelstein.
SBC/AT&T Docket No.:  05-65

Action by the Commission October 31, 2005, by
Memorandum Opinion and Order (FCC 05-184).  Chairman
Martin and Commissioner Abernathy, with Commissioners
Copps and Adelstein concurring.  Separate statements
issued by Chairman Martin, Commissioners Abernathy,
Copps, and Adelstein.
Verizon/MCI Docket No.  05-75
Wireline Competition Bureau Staff Contact:  Marcus
Maher at 202-418-2339, marcus.maher () fcc gov.
(SBC/AT&T); Gail Cohen at 202-418-0939,
gail.cohen () fcc gov (Verizon/MCI).
-FCC-

News about the Federal Communications Commission can
also be found
on the Commission’s web site www.fcc.gov.


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