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WC Docket No. 06-74 Comments Due: June 5. Responses Due June 20  

AT&T / Bell South Merger

FOR IMMEDIATE RELEASE: NEWS MEDIA CONTACT:

FCC APPROVES MERGER OF AT&T INC. AND BELLSOUTH CORPORATION
Significant Public Interest Benefits Likely to Result

Washington, D.C. – The Federal Communications Commission today approved the merger of AT&T Inc. (AT&T) and BellSouth Corp. (BellSouth). The Commission concluded that significant public interest benefits are likely to result from this transaction. Benefits to consumers include:

  • Deployment of broadband throughout the entire AT&T-BellSouth in-region territory in 2007
  • Increased competition in the market for advanced pay television services due to AT&T’s ability to deploy Internet Protocol-based video services more quickly than BellSouth could do so absent the merger.
  • Improved wireless products, services and reliability due to the efficiencies gained by unified management of Cingular Wireless, which is now a joint venture operated by BellSouth and AT&T.
  • Enhanced national security, disaster recovery and government services through the creation of a unified, end-to-end IP-based network capable of providing efficient and secure government communications.
  • Better disaster response and preparation from the companies because of unified operations.

The Commission’s analysis of competitive effects focused on six key groups of services. They are:

  • Special access competition. The record indicates that, in a small number of buildings in the BellSouth in-region territory where AT&T and BellSouth are the only carriers with direct connections, and where entry is unlikely, the merger is likely to have an anticompetitive effect. The Commission found that a commitment by AT&T to divest indefeasible rights of use (IRUs) to those facilities adequately remedied the competitive harm. The Commission further found that the merger was 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 merger is not likely to have anticompetitive effects for enterprise customers, even though the Applicants currently compete against each other with respect to certain types of enterprise services and some classes of enterprise customers. The Commission found that competition for medium and large enterprise customers should remain strong after the merger because medium and large enterprise customers are sophisticated, high-volume purchasers of communications services and because there will remain a significant number of carriers competing in the market.
  • Mass market voice competition. The Commission concluded that the merger is not likely to have anticompetitive effects in the mass market. The Commission found that neither BellSouth nor AT&T is a significant present or potential participant in this market outside of their respective regions. Consequently, the Commission found that neither party was exerting significant competitive pressure on the other in their respective in-region territories. The Commission further noted that the rapid growth of intermodal competitors – particularly cable
    telephony providers (whether circuit-switched or Voice over IP (VoIP))– is an increasingly significant competitive force in this market, and anticipates that such competitors likely will play an increasingly important role with respect to future mass market voice competition.
  • Mass market Internet competition. The Commission found that the merger is not likely to result in anticompetitive effects for mass market high-speed Internet access services. Specifically, the Commission concluded that the merger caused no horizontal effects for these services because neither BellSouth nor AT&T
    provides any significant level of Internet access service outside of its respective region. The Commission also concluded that, while the merger may result in some vertical integration, the record did not support commenters’ conclusions that the merged entity will have the incentive to act anticompetitively in the mass
    market high-speed Internet access services market.
  • Internet backbone competition. The Commission concluded that the merger is not likely to result in anticompetitive effects in the Internet backbone market. The Commission found that the merger is not likely to cause the Tier 1 backbone market to tip to monopoly or duopoly, nor is it likely to increase the Applicants’
    incentive and/or ability to raise rivals’ costs.
  • International competition. The Commission found that the merger is not likely to result in anticompetitive effects for international services provided to mass market, enterprise, or global telecommunications services customers. The Commission also concluded that the merger is not likely to result in anticompetitive effects in the international transport, facilities-based IMTS, or international private line markets.
  • In addition, on December 28, 2006, AT&T made a series of voluntary commitments [See Network Neutrality] that are enforceable by the Commission and attached as an Appendix. These conditions are voluntary, enforceable commitments by AT&T but are not general statements of Commission policy and do not alter Commission precedent or bind future Commission policy or rules.

Action by the Commission, and effective upon adoption, Friday, December 29, 2006, by Memorandum Opinion and Order. Chairman Martin and Commissioner Tate, with Commissioners Copps and Adelstein concurring, and Commissioner McDowell not participating. Docket No.: 06-74 Wireline Competition Bureau Staff Contact: Nicholas Alexander at 202-418-2173, nicholas.alexander@fcc.gov

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12/28/06 AT&T Files Additional Proposed Merger Commitments.

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Quote from Comments of Martin and Tate on Merger Conditions:

. . . . .

Other conditions, however, are unnecessary and may actually deter broadband infrastructure investment. The conditions regarding net-neutrality have very little to do with the merger at hand and very well may cause greater problems than the speculative problems they seek to address. These conditions are simply not warranted by current market conditions and may deter facilities investment. Accordingly, it gives us pause to approve last-minute remedies to address the ill-defined problem net neutrality proponents seek to resolve.

Importantly, however, while the Democrat Commissioners may have extracted concessions from AT&T, they in no way bind future Commission action. Specifically, a minority of Commissioners cannot alter Commission precedent or bind future Commission decisions, policies, actions, or rules. Thus, to the extent that AT&T has, as a business matter, determined to take certain actions, they are allowed to do so. There are certain conditions, however, that are not self-effectuating or cannot be accomplished by AT&T alone. To the extent Commission action is required to effectuate these conditions as a policy going forward, we specifically do not support those aspects of the conditions and will oppose such policies going forward.

. . . . .

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On October 13, 2006, AT&T submitted a supplemental filing, attached hereto, setting forth proposals made by the Applicants at the request of members of the Commission. The Commission hereby seeks public comment this filing and the proposals contained therein. Interested parties must file comments no later than October 24, 2006. The merger conditions address:

---------------------------

AT&T Inc. (“AT&T”) and BellSouth Corporation (“BellSouth”) (collectively, “the Applicants”) have filed a series of applications pursuant to sections 214 and 310(d) of the Communications Act of 1934, as amended and section 2 of the Cable Landing License Act. In these applications, the Applicants seek Commission approval of the transfer of control to AT&T of licenses and authorizations held directly and indirectly by BellSouth. This transfer of control will take place as a result of a proposed acquisition whereby BellSouth will become a wholly owned subsidiary of AT&T. These transfer of control applications pertain to domestic and international section 214 authorizations, cable landing licenses, Part 25 satellite earth station authorizations,
various wireless licenses and Part 5 Experimental Radio Service licenses.

The Applicants also seek consent to the transfer of control of Cingular Wireless LLC (“Cingular”) and its various subsidiaries and affiliates. The Applicants assert that the transfer of control of the vast majority of Cingular’s licenses and authorizations will be non-substantial (i.e., pro forma) in nature and that the Commission’s rules and precedents require only post-consummation notification rather than advance consent for the proposed transaction. Nevertheless, the Applicants have filed applications seeking advance consent out of “an abundance of caution.”

These transfer of control applications were filed in connection with a proposed acquisition whereby AT&T will acquire BellSouth. At closing, a wholly owned subsidiary of AT&T will be merged with and into BellSouth, with BellSouth being the surviving entity. Each share of common stock of BellSouth will be converted into 1.325 shares of AT&T common stock. BellSouth thus will become a wholly owned subsidiary of AT&T. While AT&T will become the new parent of BellSouth, BellSouth will continue to own the stock of its subsidiaries, and BellSouth and its subsidiaries will continue to hold all of the FCC licenses and authorizations that they hold prior to the merger.

In addition, by combining the separate interests AT&T and BellSouth currently have in Cingular, that entity will become a wholly owned subsidiary of AT&T. Cingular will continue to hold all of its current interests in its subsidiaries and affiliates, and Cingular, its subsidiaries, and its affiliates will continue to hold all of the FCC licenses and authorizations that they hold prior to the merger.

..... - Public Notice April 2006

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