The Federal Communications Commission yesterday approved the controversial acquisition of Ameritech by super-Bell carrier SBC Communications. The merger now appears free to proceed, nearly a year and a half after it was announced.
As expected, the FCC imposed a number of conditions on the merger - totaling 30 - that attempt to force SBC to fully open its local markets to competition and commit the company to enter new markets against other Bells.
FCC Chairman William Kennard viewed the move as the best solution to a difficult problem: how to justify the merger of two more Bells who were originally supposed to compete with each other. "The Commission chose to reject both extremes advanced by proponents and opponents of this merger - approval without conditions or disapproval without conditions," Kennard said in a statement. "These extremes were more alike than different. They had in common a failure to move the status quo, to further advance competition in local telecom markets."
The commission's two Republican members voted for the merger but criticized the way in which the commission handled the job. They criticized mostly secret negotiations between the FCC and SBC to come up with the merger conditions.
Under these conditions, SBC and Ameritech will create one or more separate affiliates to provide all "advanced services" in the combined region. The affiliates will be audited to make sure they treat competitors and Ameritech itself alike when the companies order up services such as DSL.
SBC and Ameritech also must improve their intercarrier ordering systems and make them uniform across their combined region. The merged company also must eventually enter 30 new markets against companies such as Bell Atlantic, BellSouth and US West or face a penalty.
Critics have charged that the conditions are unenforceable because they are hedged with various provisions for negotiation and arbitration before SBC is actually forced into a penalty situation.
The FCC thus maintains its record of never having actually rejected a merger ever since enactment of the Telecommunications Act of 1996. Some analysts feel this action may render toothless Kennard's statement criticizing the proposed MCI WorldCom/Sprint merger. The FCC did in effect stop one rumored merger possibility - a combination explored by SBC with AT&T in the waning days of former AT&T CEO Robert Allen's term - when former chairman Reed Hundt all but warned the two companies not to come to terms.
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