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AT&T offers more for BellSouth deal approval

Telephone carrier agrees to stiffer conditions on its acquisition of BellSouth to try to win approval from the FCC.

AT&T has agreed to stiffer conditions on its acquisition of BellSouth to try to win approval from the U.S. Federal Communications Commission, according to a letter filed with the agency late Thursday.

The No. 1 U.S. telephone carrier said it would sell off certain wireless airwaves in the 2.5 gigahertz band, offer a $19.95 per month stand-alone basic high-speed Internet service and for up to 24 months would not charge content providers like Google to speed their services to consumers.

The FCC has been reviewing the proposed $85.8 billion deal for more than eight months. Four FCC commissioners, two Republicans and two Democrats, have been deadlocked for weeks over possible conditions.

"In order to break the impasse, and in the interest of facilitating the speediest possible approval of the merger by the commission, applicants agree to the attached merger commitments," Robert Quinn, AT&T's senior vice president for federal regulatory affairs, said in the letter outlining the new conditions.

The fifth commissioner, Republican Robert McDowell, said he would not vote on the deal because of his past work for competitors to the two telephone carriers. That forced AT&T and BellSouth to offer more concessions to win over the two Democrats.

One source familiar with the matter said the commissioners may vote as early as Friday to approve the deal but it could take longer as they review the details.

The FCC's green light is the last hurdle for the acquisition, which would cement AT&T's position as the largest telecommunications provider in the United States.

The company also agreed to freeze prices and price caps for some wholesale rates for competitors to gain access to AT&T's network. That condition would last 48 months. Initially it had offered to freeze prices for 30 months.

Rivals to AT&T and BellSouth had complained the initial conditions, offered in October, were insufficient and would undermine competition, particularly for high-speed Internet service. They said the restrictions at the very least should last several years longer than proposed.

In its offer of the additional conditions, AT&T said that the Justice Department's antitrust division had cleared the deal without any conditions.

"Nevertheless, merger opponents continue to demand even more concessions, including those they were unable to obtain from Congress or that are being considered in pending, industry-wide rulemaking proceedings," Quinn said.

The condition on Internet content was of particular note, because AT&T had strenuously objected to any restriction on how it charged for services. The issue, known as Net neutrality, had attracted the attention of Congress earlier this year, though attempts to write such a limitation into law failed.

"By holding AT&T's feet to the fire and demanding the Internet remain neutral, the FCC can maintain a level playing field for all," said Mark Cooper, research director at the Consumer Federation of America.