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FCC vote on AT&T-BellSouth merger postponed

Commission cancels Friday meeting, pushes back vote on the proposed $80 billion merger until Nov. 3.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
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Marguerite Reardon
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The Federal Communications Commission canceled its meeting Friday in which it was supposed to vote on the proposed $80 billion merger of AT&T and BellSouth.

The FCC had planned to vote on the merger during its regular open meeting on Thursday, but removed it from the agenda and postponed the vote until 11 a.m. EDT Friday.

The FCC is split between Democrats and Republicans on the merger. Chairman Kevin Martin, a Republican, had been pushing for the deal to be approved without any restrictions, according to sources. But the two Democratic commissioners, Jonathan Adelstein and Michael Copps, were infuriated earlier this week when the Department of Justice unconditionally approved the merger.

In an effort to sway the Democrats to their side, AT&T submitted alternative proposals to the FCC on Thursday, according to a story first published by Reuters.

On Friday morning, commissioners Adelstein and Copps sent a letter to chairman Martin asking for more time to consider these possible conditions to the merger. Martin responded in a letter to the commissioners stating he would allow the proposals to be reviewed by the public for 10 days, after which time the commission would vote on the merger application. A meeting has been scheduled for Nov. 3.

Even though the Republicans control the FCC with three of the five commissioner seats, it's crucial for at least one of the two Democrats to approve the merger, since one of the Republicans, Robert McDowell, has said he will not vote on the merger. Before his appointment to the FCC, McDowell had worked for a group that represents competitors to AT&T and BellSouth.

Although AT&T and BellSouth do not directly compete in the local, long-distance or broadband markets, they do compete for business customers. And together they would create the largest phone company in the United States serving customers in 22 states. The merger would also give AT&T complete control over Cingular Wireless, which is jointly owned by AT&T and BellSouth.

AT&T executives believe the FCC should not impose any limitations on the merger. But the company indicated it's willing to compromise to get the deal closed.

"We firmly believe, as do three foreign countries, 18 state commissions and the Department of Justice--every regulatory or legal entity that had an obligation to examine the benefits of this merger--that no conditions on this merger are necessary for this combination to be a public benefit," said Michael Balmoris, an AT&T spokesman. "However, we are open to discussing with the Democratic FCC commissioners reasonable conditions on the merger in order to obtain unanimous approval, so long as they do not affect our ability to deliver merger benefits to customers and shareowners."