BellSouth and AT&T Close Deal
December 30, 2006
BellSouth and AT&T Close Deal
By VIKAS BAJAJ
Federal regulators approved AT&T’s $85.8 billion acquisition of BellSouth yesterday, allowing the companies to close their delayed deal.
The approval came a day after the two companies disclosed concessions designed to win the support of dissenting policy makers.
The Federal Communications Commission cleared the deal, the largest telecommunications merger in history, after AT&T offered to abide by certain conditions sought by two Democratic commissioners who found themselves with leverage after one of their three Republican colleagues recused himself from voting on the acquisition, leaving the agency tied 2-to-2.
The deal will go a significant distance toward recreating the prebreak-up AT&T. The company’s local-phone network will traverse 22 states and stretch from Miami to San Francisco and include the Great Lakes region.
The old AT&T was broken up in 1984 into seven local-phone companies and one long-distance company, of which only three survive today: AT&T, Verizon Communications and Qwest Communications International. The acquisition also will give AT&T, based in San Antonio, total control of Cingular Wireless, the nation’s largest mobile phone company and until now a 60-40 joint venture with BellSouth.
The combined company has 58 million cellphone customers, 67.5 million phone lines and 11.5 million broadband users. It would have reported revenue of $115 billion in 2005. It employs more than 300,000 people.
The approval hinged on a number of conditions, chief among them a “network neutrality” pledge by AT&T to allow its customers unfettered access to data and services over high-speed Internet connections. The company agreed to live by the pledge for two years or until Congress addresses the issue, something many officials and experts say could happen in the coming year.
In practical terms, the guarantee will not change how consumers use the Internet. But many advocates and policy makers have worried that with the dominance that cable and phone companies exercise over the broadband business, they could control, restrict or impede what customers can do with their connections.
That fear has been stoked by telecommunications executives who have said they would like to charge content providers like Google extra for the smooth and speedy delivery of services like TV shows over broadband connections.
“It’s a historic breakthrough,” Jonathan S. Adelstein, one of the Democratic commissioners who voted for the deal, said in a telephone interview. “It’s going to set the terms of the debate going forward. It is going to cause us all to think deeply about how we address this.”
In a statement, the other Democratic commissioner, Michael J. Copps, described the agreement as a step “that will preserve and encourage the truly transformative openness and power of the Internet.”
Though hailed by several consumer advocates, critics said AT&T’s pledge did not go far enough because it would not cover a new higher-speed service AT&T is building in California, Texas and elsewhere to provide video over fiber optic cables.
“Whether I want to watch the Southern Baptist Convention or Al Jazeera or The Jerusalem Post, that should be my decision,” said Dave Burstein, the publisher of DSL Prime, an industry newsletter. “That’s what we are fighting for: the basic First Amendment.”
AT&T officials said that while its video service would not be covered, customers who signed up for broadband Internet services would be able to tap into Internet-based video and data services from other sources without restriction or interference.
“These commitments reflect our long history of providing consumers and businesses with the most advanced and affordable communications services," AT&T’s chairman and chief executive, Edward E. Whitacre Jr., said in a statement.
The latest negotiations on this and other concessions between AT&T and the F.C.C. began after Robert M. McDowell, the Republican commissioner who had recused himself, announced on Dec. 18 that he could still not vote on the deal even though the commission’s general counsel had cleared him to do so. Before being appointed to the commission this summer, Mr. McDowell was the general counsel for Comptel, a trade group that represented rivals of AT&T and opposed the deal.
His recusal left the F.C.C. chairman, Kevin J. Martin, without enough votes in favor of the deal, which had already won a unconditional approval from the antitrust division of the Justice Department.
Analysts and officials said the negotiations took on a sense of urgency because AT&T wanted the deal, which had already been delayed several times, completed by the end of the year so it could be closed and accounted for in the current year and to please investors. Shares of AT&T are up more than 26 percent and BellSouth 48 percent since the deal was announced in March. At that time the deal was valued at $67 billion. Both stocks rose slightly yesterday.
“While this is not at all show-stopping by any means, it is the best that all the parties could do given the enormous pressure to get this deal done before the end of the year,” said Jessica Zufolo, senior policy director for Medley Global Advisors, a research firm.
Members of Congress with an interest in telecommunications have been urging the two sides to get the deal done. Representative John D. Dingell, the Michigan Democrat who is expected to head the Energy and Commerce Committee in January, publicly chided the Democratic commissioners for pressing AT&T to make concessions he said had nothing to do with the merger.
“I have significant concerns over the process followed at the F.C.C. during these final weeks, and believe that such process may be suitable for committee review,” Mr. Dingell said in a statement yesterday.
Other concessions AT&T agreed to in exchange for approval included:
A freeze on some fees it charges rivals for the rent of some high-capacity wires that serve office buildings.
A commitment to offer high-speed Internet service to all of its local phone customers by the end of next year.
Allowing customers to buy high-speed Internet service without a local-phone line.
The sale of certain wireless spectrum.
Bringing back 3,000 jobs BellSouth has sent overseas.
Copyright 2006 The New York Times Company
FCC Approves AT&T's Buyout Of BellSouth
WASHINGTON, Dec. 29, 2006
(AP) The Federal Communications Commission unanimously approved AT&T Inc.'s $86 billion buyout of BellSouth Corp. Friday, the day after the company offered a new slate of concessions for consumers and competitors.
The FCC's approval was the last major regulatory hurdle for the proposed deal, which is the largest telecommunications merger in U.S. history.
Lawyers for AT&T and the two Democratic commissioners who had opposed the merger, hammered out a compromise, the details of which were released Thursday night.
Among the conditions offered by AT&T is a promise to observe "network neutrality" principles, an offer of $19.95 per month stand-alone digital subscriber line service and a vow to divest some wireless spectrum.
The FCC's approval was the last major regulatory hurdle for the proposed deal, which is the largest telecommunications merger in U.S. history.
AT&T offered the concessions after a little more than a week of marathon negotiations with lawyers who work for the two Democrats on the commission, Michael Copps and Jonathan Adelstein.
Adelstein said Friday he was pleased with the agreement.
"We got substantial concessions that are going to mitigate a lot of the harms that would otherwise have resulted from this merger," he said.
The reaction from Commission Chairman Kevin Martin, however, was decidedly negative. The chairman found some conditions to be "unnecessary" and said that some "impose burdens that have nothing to do with the transaction, are discriminatory, and run contrary to commission policy and precedent."
Copps was cautiously optimistic, saying that the approval was "not a triumph for huge corporate mergers but a modest victory for American consumers." He added that he was not entirely satisfied with the compromise but believed it is "a genuine step forward" in several areas.
Consumer advocates had opposed the merger from the beginning, but put the best face on the compromise, especially on the issue of network neutrality, which can be loosely defined as the idea that all Internet traffic should be treated equally.
Mark Cooper, research director for the Consumer Federation of America said AT&T has pledged to protect "the free and open Internet." He called it a "win for the public" and said he will continue to work for federal legislation on network neutrality in the New Year.
The agreement came together 10 days after Republican Commissioner Robert McDowell announced that he would not vote, despite being authorized to do so by the FCC's general counsel. The buyout passed by a 4-0 vote with McDowell not participating.
McDowell, a Republican, had decided not to participate in the negotiations because of his former position as a lobbyist for Comptel, a trade organization that opposes the merger.
McDowell said in a statement Friday that he was "delighted that my colleagues and the merging companies were able to come to terms so quickly after last week's announcement."
Martin, who supported approval of the merger without conditions, had declared an impasse in the negotiations and was betting that McDowell would vote in favor of the deal break a 2-2 partisan deadlock.
But with McDowell's firm declaration that he would not vote, the pressure shifted to AT&T, which had hoped to close the transaction by the end of the year, a development that put the two Democrats in a much stronger position.
Adelstein said the agreement could have been completed a month ago were it not for the McDowell issue. "It turns out there was never an impasse after all," he said.
Under the agreement, BellSouth shareholders will receive 1.325 shares of AT&T stock for every share of BellSouth stock. In March, when the buyout was announced, it was valued at $67 billion. But thanks to a more than 25 percent increase in the value of AT&T's stock, the total is up to around $86 billion.
The Justice Department approved the merger on Oct. 11, but it attached no conditions, a move that prompted outrage among many Democrats.
In an effort to gain the support of Copps and Adelstein, AT&T submitted a set of concessions on Oct. 13, but they were rejected.
In AT&T's letter committing to the new conditions, the company's senior vice president in charge of regulatory affairs, Robert W. Quinn Jr., noted that the new concessions were "significantly more extensive than those submitted on Oct. 13."
The new offer extends the lifespan of many conditions from 30 months under the old deal to 42 months or longer in some cases.
Among the promises made by the company:
An offer of stand-alone, DSL Internet service to customers in its service area for $19.95 per month for 30 months. The "naked DSL (digital subscriber line)" offer would allow those who live in AT&T and BellSouth's service areas to sign up for fast Internet access without being required to buy a package of other services.
To cap rates for "special access" customers, usually competitors and large businesses that pay to connect directly to a regional phone company's central office via a dedicated fiber optic line, for 48 months.
To divest all of the 2.5 GHZ spectrum currently licensed to BellSouth within one year of the merger closing date.
To "repatriate" 3,000 jobs that were outsourced by BellSouth outside the U.S. by Dec. 31, 2008, with at least 200 of those jobs to be located in New Orleans.
The most difficult item in the negotiators was that of network neutrality.
AT&T had clearly drawn a line in the sand on the issue, and was not prepared to offer any promises that would not affect the telecommunications industry as a whole.
The company's position has been receiving generally positive reaction from proponents of the concept, but some skepticism from others, who are concerned with the wording of AT&T's commitment.
AT&T says it will "maintain a neutral network and neutral routing in its wireline broadband Internet access service" for two years and that it would not sell services to Internet content providers that "privileges, degrades or prioritizes" traffic over its wireline broadband service.
But it makes an exception to the company's Internet Protocol television service.
Martin is unconvinced the network neutrality provisions are necessary.
"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," he wrote. "These conditions are simply not warranted by current market conditions and may deter facilities investment."
Meanwhile, Rep. John Dingell, D-Mich., incoming chairman of the House Energy and Commerce Committee, indicated his displeasure in a statement that said the process followed by the FCC may be "suitable for committee review."
Earl Comstock, president and CEO of Comptel, a group that represents competitors of AT&T, said he would have preferred to see more conditions from AT&T, and questioned why the compromise came so quickly.
"Compared to where it was in the fall, there was definite progress," he said of the deal. "But given the negotiating position (of the Democrats) it could be better."
The combination of San Antonio-based AT&T and Atlanta-based BellSouth will have operations in 22 states. AT&T estimates that about 10,000 jobs will be phased out over three years.
Combined, the companies generate about $117 billion in revenue and operate 68.7 million local phone lines stretching coast to coast across the southern United States and up through the Midwest.
The buyout will also give AT&T complete control over Cingular Wireless, the nation's largest wireless telecommunications provider, which it owns in partnership with BellSouth.
AT&T Chairman and CEO Edward E. Whitacre Jr. said in a statement: "AT&T will be an engine for innovation, competition and growth for our customers at home and abroad. In the Southeast, we will build on BellSouth's excellent record of serving customers and communities. And we are ready to lead the way in a new era of integrated wireless services nationwide."
©MMVI The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
BellSouth and AT&T Close Deal
By VIKAS BAJAJ
Federal regulators approved AT&T’s $85.8 billion acquisition of BellSouth yesterday, allowing the companies to close their delayed deal.
The approval came a day after the two companies disclosed concessions designed to win the support of dissenting policy makers.
The Federal Communications Commission cleared the deal, the largest telecommunications merger in history, after AT&T offered to abide by certain conditions sought by two Democratic commissioners who found themselves with leverage after one of their three Republican colleagues recused himself from voting on the acquisition, leaving the agency tied 2-to-2.
The deal will go a significant distance toward recreating the prebreak-up AT&T. The company’s local-phone network will traverse 22 states and stretch from Miami to San Francisco and include the Great Lakes region.
The old AT&T was broken up in 1984 into seven local-phone companies and one long-distance company, of which only three survive today: AT&T, Verizon Communications and Qwest Communications International. The acquisition also will give AT&T, based in San Antonio, total control of Cingular Wireless, the nation’s largest mobile phone company and until now a 60-40 joint venture with BellSouth.
The combined company has 58 million cellphone customers, 67.5 million phone lines and 11.5 million broadband users. It would have reported revenue of $115 billion in 2005. It employs more than 300,000 people.
The approval hinged on a number of conditions, chief among them a “network neutrality” pledge by AT&T to allow its customers unfettered access to data and services over high-speed Internet connections. The company agreed to live by the pledge for two years or until Congress addresses the issue, something many officials and experts say could happen in the coming year.
In practical terms, the guarantee will not change how consumers use the Internet. But many advocates and policy makers have worried that with the dominance that cable and phone companies exercise over the broadband business, they could control, restrict or impede what customers can do with their connections.
That fear has been stoked by telecommunications executives who have said they would like to charge content providers like Google extra for the smooth and speedy delivery of services like TV shows over broadband connections.
“It’s a historic breakthrough,” Jonathan S. Adelstein, one of the Democratic commissioners who voted for the deal, said in a telephone interview. “It’s going to set the terms of the debate going forward. It is going to cause us all to think deeply about how we address this.”
In a statement, the other Democratic commissioner, Michael J. Copps, described the agreement as a step “that will preserve and encourage the truly transformative openness and power of the Internet.”
Though hailed by several consumer advocates, critics said AT&T’s pledge did not go far enough because it would not cover a new higher-speed service AT&T is building in California, Texas and elsewhere to provide video over fiber optic cables.
“Whether I want to watch the Southern Baptist Convention or Al Jazeera or The Jerusalem Post, that should be my decision,” said Dave Burstein, the publisher of DSL Prime, an industry newsletter. “That’s what we are fighting for: the basic First Amendment.”
AT&T officials said that while its video service would not be covered, customers who signed up for broadband Internet services would be able to tap into Internet-based video and data services from other sources without restriction or interference.
“These commitments reflect our long history of providing consumers and businesses with the most advanced and affordable communications services," AT&T’s chairman and chief executive, Edward E. Whitacre Jr., said in a statement.
The latest negotiations on this and other concessions between AT&T and the F.C.C. began after Robert M. McDowell, the Republican commissioner who had recused himself, announced on Dec. 18 that he could still not vote on the deal even though the commission’s general counsel had cleared him to do so. Before being appointed to the commission this summer, Mr. McDowell was the general counsel for Comptel, a trade group that represented rivals of AT&T and opposed the deal.
His recusal left the F.C.C. chairman, Kevin J. Martin, without enough votes in favor of the deal, which had already won a unconditional approval from the antitrust division of the Justice Department.
Analysts and officials said the negotiations took on a sense of urgency because AT&T wanted the deal, which had already been delayed several times, completed by the end of the year so it could be closed and accounted for in the current year and to please investors. Shares of AT&T are up more than 26 percent and BellSouth 48 percent since the deal was announced in March. At that time the deal was valued at $67 billion. Both stocks rose slightly yesterday.
“While this is not at all show-stopping by any means, it is the best that all the parties could do given the enormous pressure to get this deal done before the end of the year,” said Jessica Zufolo, senior policy director for Medley Global Advisors, a research firm.
Members of Congress with an interest in telecommunications have been urging the two sides to get the deal done. Representative John D. Dingell, the Michigan Democrat who is expected to head the Energy and Commerce Committee in January, publicly chided the Democratic commissioners for pressing AT&T to make concessions he said had nothing to do with the merger.
“I have significant concerns over the process followed at the F.C.C. during these final weeks, and believe that such process may be suitable for committee review,” Mr. Dingell said in a statement yesterday.
Other concessions AT&T agreed to in exchange for approval included:
A freeze on some fees it charges rivals for the rent of some high-capacity wires that serve office buildings.
A commitment to offer high-speed Internet service to all of its local phone customers by the end of next year.
Allowing customers to buy high-speed Internet service without a local-phone line.
The sale of certain wireless spectrum.
Bringing back 3,000 jobs BellSouth has sent overseas.
Copyright 2006 The New York Times Company
FCC Approves AT&T's Buyout Of BellSouth
WASHINGTON, Dec. 29, 2006
(AP) The Federal Communications Commission unanimously approved AT&T Inc.'s $86 billion buyout of BellSouth Corp. Friday, the day after the company offered a new slate of concessions for consumers and competitors.
The FCC's approval was the last major regulatory hurdle for the proposed deal, which is the largest telecommunications merger in U.S. history.
Lawyers for AT&T and the two Democratic commissioners who had opposed the merger, hammered out a compromise, the details of which were released Thursday night.
Among the conditions offered by AT&T is a promise to observe "network neutrality" principles, an offer of $19.95 per month stand-alone digital subscriber line service and a vow to divest some wireless spectrum.
The FCC's approval was the last major regulatory hurdle for the proposed deal, which is the largest telecommunications merger in U.S. history.
AT&T offered the concessions after a little more than a week of marathon negotiations with lawyers who work for the two Democrats on the commission, Michael Copps and Jonathan Adelstein.
Adelstein said Friday he was pleased with the agreement.
"We got substantial concessions that are going to mitigate a lot of the harms that would otherwise have resulted from this merger," he said.
The reaction from Commission Chairman Kevin Martin, however, was decidedly negative. The chairman found some conditions to be "unnecessary" and said that some "impose burdens that have nothing to do with the transaction, are discriminatory, and run contrary to commission policy and precedent."
Copps was cautiously optimistic, saying that the approval was "not a triumph for huge corporate mergers but a modest victory for American consumers." He added that he was not entirely satisfied with the compromise but believed it is "a genuine step forward" in several areas.
Consumer advocates had opposed the merger from the beginning, but put the best face on the compromise, especially on the issue of network neutrality, which can be loosely defined as the idea that all Internet traffic should be treated equally.
Mark Cooper, research director for the Consumer Federation of America said AT&T has pledged to protect "the free and open Internet." He called it a "win for the public" and said he will continue to work for federal legislation on network neutrality in the New Year.
The agreement came together 10 days after Republican Commissioner Robert McDowell announced that he would not vote, despite being authorized to do so by the FCC's general counsel. The buyout passed by a 4-0 vote with McDowell not participating.
McDowell, a Republican, had decided not to participate in the negotiations because of his former position as a lobbyist for Comptel, a trade organization that opposes the merger.
McDowell said in a statement Friday that he was "delighted that my colleagues and the merging companies were able to come to terms so quickly after last week's announcement."
Martin, who supported approval of the merger without conditions, had declared an impasse in the negotiations and was betting that McDowell would vote in favor of the deal break a 2-2 partisan deadlock.
But with McDowell's firm declaration that he would not vote, the pressure shifted to AT&T, which had hoped to close the transaction by the end of the year, a development that put the two Democrats in a much stronger position.
Adelstein said the agreement could have been completed a month ago were it not for the McDowell issue. "It turns out there was never an impasse after all," he said.
Under the agreement, BellSouth shareholders will receive 1.325 shares of AT&T stock for every share of BellSouth stock. In March, when the buyout was announced, it was valued at $67 billion. But thanks to a more than 25 percent increase in the value of AT&T's stock, the total is up to around $86 billion.
The Justice Department approved the merger on Oct. 11, but it attached no conditions, a move that prompted outrage among many Democrats.
In an effort to gain the support of Copps and Adelstein, AT&T submitted a set of concessions on Oct. 13, but they were rejected.
In AT&T's letter committing to the new conditions, the company's senior vice president in charge of regulatory affairs, Robert W. Quinn Jr., noted that the new concessions were "significantly more extensive than those submitted on Oct. 13."
The new offer extends the lifespan of many conditions from 30 months under the old deal to 42 months or longer in some cases.
Among the promises made by the company:
An offer of stand-alone, DSL Internet service to customers in its service area for $19.95 per month for 30 months. The "naked DSL (digital subscriber line)" offer would allow those who live in AT&T and BellSouth's service areas to sign up for fast Internet access without being required to buy a package of other services.
To cap rates for "special access" customers, usually competitors and large businesses that pay to connect directly to a regional phone company's central office via a dedicated fiber optic line, for 48 months.
To divest all of the 2.5 GHZ spectrum currently licensed to BellSouth within one year of the merger closing date.
To "repatriate" 3,000 jobs that were outsourced by BellSouth outside the U.S. by Dec. 31, 2008, with at least 200 of those jobs to be located in New Orleans.
The most difficult item in the negotiators was that of network neutrality.
AT&T had clearly drawn a line in the sand on the issue, and was not prepared to offer any promises that would not affect the telecommunications industry as a whole.
The company's position has been receiving generally positive reaction from proponents of the concept, but some skepticism from others, who are concerned with the wording of AT&T's commitment.
AT&T says it will "maintain a neutral network and neutral routing in its wireline broadband Internet access service" for two years and that it would not sell services to Internet content providers that "privileges, degrades or prioritizes" traffic over its wireline broadband service.
But it makes an exception to the company's Internet Protocol television service.
Martin is unconvinced the network neutrality provisions are necessary.
"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," he wrote. "These conditions are simply not warranted by current market conditions and may deter facilities investment."
Meanwhile, Rep. John Dingell, D-Mich., incoming chairman of the House Energy and Commerce Committee, indicated his displeasure in a statement that said the process followed by the FCC may be "suitable for committee review."
Earl Comstock, president and CEO of Comptel, a group that represents competitors of AT&T, said he would have preferred to see more conditions from AT&T, and questioned why the compromise came so quickly.
"Compared to where it was in the fall, there was definite progress," he said of the deal. "But given the negotiating position (of the Democrats) it could be better."
The combination of San Antonio-based AT&T and Atlanta-based BellSouth will have operations in 22 states. AT&T estimates that about 10,000 jobs will be phased out over three years.
Combined, the companies generate about $117 billion in revenue and operate 68.7 million local phone lines stretching coast to coast across the southern United States and up through the Midwest.
The buyout will also give AT&T complete control over Cingular Wireless, the nation's largest wireless telecommunications provider, which it owns in partnership with BellSouth.
AT&T Chairman and CEO Edward E. Whitacre Jr. said in a statement: "AT&T will be an engine for innovation, competition and growth for our customers at home and abroad. In the Southeast, we will build on BellSouth's excellent record of serving customers and communities. And we are ready to lead the way in a new era of integrated wireless services nationwide."
©MMVI The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
posted by Walking Contradiction at 12/31/2006 05:37:00 PM
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