Merger With BellSouth Could Remain Stalled at FCC
By Amy Schatz
The Wall Street Journal
Saturday, December 8, 2006
WASHINGTON -- The Federal Communications Commission could
remain deadlocked on the pending $84 billion merger of
AT&T Inc. and
BellSouth Corp., as a new Republican commissioner raised
new questions about whether he intends to vote.
Friday, as expected, the FCC's general counsel cleared
commissioner Robert McDowell to vote on the AT&T-BellSouth
deal. The five-member FCC has been deadlocked 2-2 for
several months over potential merger conditions on the deal
as Mr. McDowell sat out of deliberations on
Before joining the FCC, Mr. McDowell lobbied on behalf of a
trade group that represents smaller phone companies. That
trade group has actively opposed the deal.
Just minutes after the general counsel's decision was
released, Mr. McDowell released a statement raising the
possibility that he may decline to vote on the deal, even
though he's been cleared to do so. The Republican
commissioner's statement didn't say that he won't vote. It
implied he was thinking the matter over.
In the statement, he "strongly" urged his colleagues to
"resolve their differences" while he reviews the general
counsel's decision. "In addition, I look forward to
receiving a copy of Mr. Feder's response to Congressman John
Dingell's letter of December 5," the statement said. In
that letter, Mr. Dingell, the Democratic incoming chairman
of the House Energy and Commerce committee, asked 15 pointed
questions about the suitability of Mr. McDowell's
involvement in the merger vote. A response to that letter
is expected to be filed late Monday.
In a memo, FCC general counsel Sam Feder argued that the
government's interest in seeing the merger deliberations
move forward outweighed concerns about potential conflicts
of interest. He noted that both AT&T and BellSouth had
agreed to Mr. McDowell's participation and that he might be
"the only person available to break the impasse that has
been reached in this proceeding."
However, Mr. Feder said that he consulted with the director
of the Office of Government Ethics, who called the decision
"a very, very close call" on which reasonable persons could
differ," according to the memo.
"Ultimately its Rob's decision," said an FCC official close
to the deliberations. Bringing Mr. McDowell into the merger
deliberations was "a last resort, not a first resort," the
FCC Chairman Kevin Martin had hoped to put the
AT&T-BellSouth merger up for a vote on Dec. 20. However, it
now appears unlikely the matter will be resolved that
quickly. Mr. McDowell is expected to publicly announce his
decision on whether to vote next week.
There's been little question about whether the FCC will
approve the deal, just about what conditions would be
required. Among the potential conditions that have been
discussed are potential antidiscrimination rules for the
Internet and price controls over high-volume data lines for
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