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FCC Postpones AT&T-BellSouth Vote

The FCC has postponed its consideration of the AT&T Inc.-BellSouth Corp. merger until Friday. The agency was scheduled to discuss the matter today at its regular monthly meeting, but analyst reports point out the two Democratic commissioners are balking at the apparent lack of conditions being imposed on the merger.

The Department of Justice (DoJ) on Wednesday approved the deal with no conditions, drawing the ire of competitive interests and some federal lawmakers. Meanwhile, Sens. Mike DeWine, R-Ohio, and Herb Kohl, D-Wis., have specifically asked the FCC to force the new company to share the wireless spectrum it will control.

The FCCs newest commissioner, Robert M. McDowell, formerly a lawyer for the competitive carrier association, COMPTEL, which opposes the megamergers, has recused himself from the AT&T-BellSouth proceedings, but at least one group of analysts posits he might have to serve as a tiebreaker if the FCCs chairman cannot get a majority vote. Blair Levin, Rebecca Arbogast and David Kaut, all of research firm Stifel Nicolaus, also said Chairman Kevin J. Martin is slated to travel to Asia within the month, which could push back action beyond next week, they wrote in a memo to clients.

In the meantime, Democratic commissioners Jonathan S. Adelstein and Michael J. Copps sharply criticized the DoJ Wednesday for not attaching any requirements to the merger and likely will stall the FCCs progress on approving the deal, analysts predicted. We continue to expect the FCC to approve the current deal with conditions similar to last year’s relatively modest ones, the Stifel Nicolaus analysts wrote. We remain skeptical the Republicans or the companies, which could facilitate a compromise, will agree to sweeping new requirements, but it’s certainly possible the Democrats could extract some targeted concessions.

Critics — including some legislators — have asked the FCC not to approve the AT&T-BellSouth merger until Federal Judge Emmet G. Sullivan completes a review of the AT&T-SBC and Verizon Communications Inc.-MCI Inc. deals, under the Tunney Act.

AT&T Inc. www.att.com

COMTPEL www.comptel.org

Department of Justice www.usdoj.gov

FCC www.fcc.gov

Stifel Nicolaus www.stifel.com


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