Bell Atlantic GTE Merger CC Docket No. 98-184

GTE CORPORATION AND BELL ATLANTIC CORPORATION. Granted consent to  transfer control of FCC licenses and lines in connection with their proposed merger. Dkt No.: 98-184. Action by the Commission. Adopted: June 16, 2000. by MO&O. | Word |(FCC No. 00-221). CCB 

On January 27, 2000, Bell Atlantic Corporation and GTE Corporation (the Applicants) submitted supplemental materials in connection with their joint applications under sections 214 and 310(d) of the Communications Act, 47 U.S.C.    214 and 310(d), requesting Commission approval of the transfer of control to Bell Atlantic of licenses and authorizations controlled or requested by GTE or its affiliates or subsidiaries.  Since that time, the Applicants have made further submissions that contain revisions to proposals made by the Applicants in their January 27th filing.  We seek comment on the Applicants' further submissions, in particular the following: 

          1.   Internet Backbone Spinoff.  The Applicants today submitted a revised proposal for transferring the Internet backbone and related assets of GTE Internetworking Incorporated (now known as Genuity Incorporated) to a separate public corporation (referred to herein as "Genuity") that would be owned and controlled by public shareholders and operated independently of the merged Bell Atlantic/GTE entity.  Under the revised proposal, after an initial public offering of Class A common stock, the merged Bell Atlantic/GTE will receive shares of Genuity Class B stock that will have less than 10% of the voting rights and right to dividends or other distributions, along with a potential right to convert its interest to up to 80% of Genuity in accordance with certain conversion principles outlined in the filing. 

Under those conversion principles, the proposal states that the merged entity's right to convert arises only after it eliminates applicable section 271 restrictions representing 50% of Bell Atlantic's total in-region access lines within five years of the merger's close.  Prior to achieving the 50% threshold, the merged entity will be entitled to no more than a 10% interest in Genuity. 

Assuming the 50% threshold is met, under the proposal, the merged entity may exercise its conversion rights for the purpose of immediately bringing Genuity's business into compliance with section 271 provided that it has eliminated section 271 restrictions as to at least 95% of total Bell Atlantic lines, and the arrangement conforms to a revenue restriction contained in an agreement between the merged entity and Genuity.  If the merged entity sells the conversion right before achieving a 95% section 271 threshold, it would receive none of Genuity's appreciation (other than on the up-to-10% interest), and would receive the value of the merged entity's initial investment plus a rate of return based on the S&P 500. 

In addition to revising the conversion principles, the Applicants modified certain other aspects of the proposal, including the investor safeguards and structure of Genuity's Board of Directors. 

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Released: January 31, 2000. COMMISSION SEEKS COMMENT ON SUPPLEMENTAL FILING SUBMITTED BY BELL ATLANTIC CORPORATION AND GTE CORPORATION.

Petitions/Comments on Internet backbone proposal due: February 15, 2000.

Oppositions/Responses on Internet backbone proposal due: February 22, 2000.

Petitions/Comments on all other issues due: March 1, 2000;

Oppositions/Responses on all other issues due: March 16, 2000. (DA No. 00-165). Dkt No.: CC- 98-184.

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