more on Comment on AT&T/BellSouth and the FCC]

[Dave Farber <dave () farber net>]

-------- Original Message --------
Subject: RE:Comment on AT&T/BellSouth and the FCC
Date: Sun, 05 Mar 2006 14:10:00 -0500
From: Atkinson, Robert <rca53 () columbia edu>
To: Telecom Regulation & the Internet <CYBERTELECOM-L () LISTSERV AOL COM>,
       dave () farber net

The FCC's review of mergers hinges on whether the license transfers
associated with the merger are "in the public interest." It is not, per
se, an antitrust or a competition analysis. The FCC used (and I think
still does use) a four-step processes to make this "public interest"
determination:



1.  Will the merger result in a violation of the law?



For example: Sec. 271 prohibition of BOC long distance (BA-GTE;
SBC-SNET; USWest-Qwest), Foreign ownership limits (DT-Voicestream), Sec.
652(a) prohibition on LEC/cable buy-out (AT&T-Teleport; AT&T-TCI)



2.  Will the merger result in a violation of FCC rules or regulations?



For example: Spectrum caps (wireless properties in major telecom
mergers- e.g. SBC-Ameritech), Access to cable programming (AT&T-TCI)



3.  Will merger substantially frustrate or impair FCC and State
regulators' ability to implement or enforce the Communications Act,
particularly TA'96 policy goals of increasing competition and reducing
regulation (since Congress declared those goals to be in the public's
interest).



Three (possibly four) theories of how mergers might impair regulators'
implementation/enforcement: 1)Impairment of potential competition; 2)
Effects on comparative practices analysis ("benchmarking"); Incentive
and ability to engage in increased discrimination ("spill over
effects"); a recent possible fourth: effects on interactive TV and/or
Instant Messaging



4.  Are there any public interest benefits that can be achieved ONLY as
the result of the merger?



For example: Upgrading CATV systems for competitive local telephone
service (AT&T-TCI), Out-of-region entry by ILECs (SBC-Ameritech; Bell
Atlantic-GTE), Substantial synergies=lower rates, CLEC + CLEC
merger=stronger competitor (Worldcom-MCI)



Questions 1 and 2 are relatively easy. For example, the 1997 proposal
for SBC to acquire AT&T was "unthinkable" because it would have been
illegal (Question #1) in the SBC states since SBC didn't have sec. 271
long distance authority. The deal could (presumably) have been
acceptable IF SBC divested the AT&T assets in the SBC states, but that
would have been difficult and probably destroyed the value of the deal
to SBC.



The "horizontal" mergers (NYNEX-Bell Atlantic, Bell-Atlantic-GTE,
SBC-PacTel, SBC-SNET, SBC-Ameritech) don't raise significant Question 1
or 2 issues that can't be resolved by minor spin-offs. This means that
Question 3 and 4 are the key issues.



Disclosure: I was the Common Carrier Bureau deputy chief heavily
involved in the staff review of the SBC-Ameritech and Bell Atlantic-GTE
merger reviews, particularly the conditions imposed by the Commission.
In both cases, the initial conclusion was that the merger would NOT be
in the public interest (mostly because Question 3 conclusions outweighed
the Question 4 conclusions).  However, the conditions tipped the "public
interest" balance in favor of approving the license transfers.



It will be interesting to see how the same four questions are answered
in a review of an at&t-BS deal. Even if the initial weighing is
"against," conditions may still tip the "public interest" balance.



Bob Atkinson





----Original Message-----
From: Telecom Regulation & the Internet
[mailto:CYBERTELECOM-L () LISTSERV AOL COM] On Behalf Of Frank Muto
Sent: Sunday, March 05, 2006 8:21 AM
To: CYBERTELECOM-L () LISTSERV AOL COM
Subject: [CYBERTEL] Comment on AT&T/BellSouth and the FCC



Oh, ok, like this REALLY comes as a big surprise?



This is just what may have happened in 1997 when SBC wanted to buy AT&T
and

BellSouth was in the mix then and in 2001 dropped it.



So the question is, what is different now than in 1997 and 2001, as to
let

these mergers go through when back then it was not approved?



SBC/AT&T 1997

http://www.bizjournals.com/sanfrancisco/stories/1997/05/26/daily1.html



AT&T and BellSouth - 2001

http://www.businessweek.com/bwdaily/dnflash/sep2001/nf20010927_3923.htm



Do you really think AT&T's divestures of its cable and wireless units
were

not a grand plan to make the future mergers easier? This was a setup in
the

making for many years, in just that the 1997 attempt to merge was a
"test"

to see who were friends or foes in Washington. When they found the foe,
they

bought their friends in the next election.



It will be interesting to see what happens when the FCC begins reviewing
the

reported and alleged merger of the AT&T/BellSouth deal. As it may be a
much

different Commission body with the hopes of Robert McDowell's
confirmation

by the Senate.



Mr. McDowell is a telecom lawyer who currently serves as

assistant general counsel at Comptel and opponent of the AT&T and
Verizon

mergers last year. Mr. McDowell is scheduled to appear before a Senate

committee on Thursday for his confirmation and is likely to be asked
about

the merger.



It will be also interesting to see how Chairman Martin handles Mr.
McDowell.

Although he is a Republican, his nomination to the FCC was not welcomed
by

the Bell companies. Martin may have a tougher go at it this time without

having any leverage over Commissioners Copps' job to hang over his head
and

Commissioner Adelstein losing an ally. Perhaps Martin's whipping days
are

numbered in making partisan rulings?



As you may remember, Commissioner Copps' reappointment was still in the
air

when the FCC pushed the SBC/AT&T - Verizon/MCI mergers through, with
really

no enforceable conditions. Both Copps and Adelstein where in a tough

position when they gave in the on DSL changes in hopes of getting
tougher

conditions on the pending mergers.



Well that backfired, and hopefully with jobs secured for a while and a

potential ally in the making, they may be willing to push Martin's back

against the wall. It will also be interesting  to see what newly
appointed

Commissioner Deborah Tate will swing on this.









Frank Muto

Co-founder -  Washington Bureau for ISP Advocacy - WBIA

Telecom Summit Ad Hoc Committee

http://gigabytemarch.blog.com/     www.wbia.us


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