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AT&T, TCI holders approve megamerger

Shareholders for AT&T and TCI gave swift approval to the proposed merger between the two companies in separate votes.

Shareholders for AT&T and TCI gave swift approval to the proposed merger between the two companies in separate votes today.

AT&T company executives said that 99 percent of voting shareholders approved the merger, which will give the long distance giant a long-coveted foothold in local telephone markets.

Meanwhile, TCI shareholders meeting at that company's Colorado headquarters also approved the merger in a separate vote this morning.

The double shareholder votes set the stage for the final act in the two companies' $48 billion merger. Still on the docket is the expected nod by the Federal Communications Commission, which may come sometime this week.

The Department of Justice earlier gave the deal its own green light, on the condition that TCI divest itself of part ownership in Sprint's wireless phone venture, which directly competes with AT&T's mobile phone unit.

The FCC has long been the agency with the most potential to be the stumbling block in the deal. But commissioners now are expected to give their approval to the deal at some point this week.

A coalition led by America Online and US West had lobbied regulators to push for leased access to TCI's cable network for competing ISP services.

AT&T and TCI have said that their customers will have to use the TCI-controlled @Home service in order to get high-speed cable Internet access.

But the FCC has already said it would not address the "open access" issue as a part of the merger. In a Washington press conference, FCC chairman William Kennard told reporters that the merger was the wrong context to deal with the issue.

"It is an issue, that in my view, needs to be considered in a more comprehensive way, an industry wide way, as opposed singling out just two single players," Kennard said.

Meanwhile, a handful of municipalities have also given their own approval. The open access issue has come up in several city council and county regulatory bodies, but has been set aside for future consideration.

Once all the regulatory bodies have given the green light, AT&T will be able to offer local telephone service through TCI's cable network, in a move to compete with the Baby Bell companies on their own turf.

The company plans to launch trials of voice, video, and high-speed data services in 10 cities over the course of 1999, and will roll in much of the rest of TCI's service areas by the end of 2000. AT&T has simultaneously struck deals with Time Warner and several other cable operators to provide local telephone service over their networks.