The agreement moves the two companies a step closer to approval of their pending merger, which had been criticized by consumer advocates and the Public Utilities Commission in Ohio.
Today's settlement, which includes steep penalties if the two companies fail to fulfill their side of the deal, defuses much of that criticism, and makes state approval of the deal likely.
"We're very satisfied with the settlement," said Selim Bingol, a spokesman for SBC. "We think it's very good for consumers." The company had already planned to make many of the investments contained in the agreement, Bingol added.
The agreement--if approved by the Ohio Public Utilities Commission--marks the first round of conditions to be placed on the two companies' $73 billion deal.
Under the terms of the settlement, the two companies have agreed to keep the number of Ameritech jobs in Ohio at least as high as pre-merger levels for at least two years, and to keep the state's residential phone rate cap in place until 2002.
The companies also have agreed to enter four new Ohio local phone markets, where Ameritech currently does not operate. These will include Cincinnati, which is dominated by Cincinnati Bell, and several smaller markets served by GTE and other companies.
The merged company will lease its network to competitors at a discounted rate, well below that charged anywhere else in the country--opening the possibility for lower residential rates from alternative providers across the state.
Consumer groups also won provisions to guarantee the merged company will continues to invest in low-income areas.
The new agreement contains strict provisions that will ensure high-speed Internet services are rolled out in poor urban neighborhoods, at about the same pace as in more profitable areas.
"This is something we were very concerned about, since we know that telephone companies traditionally test these services in wealthy white neighborhoods," said Ellis Jacobs, an attorney for the Legal Aid Society of Dayton, which was representing a low-income urban neighborhood group involved in the negotiations.
The two companies also have committed more than $3 million to community technology programs designed to spread the use of computers and the Internet to poor neighborhoods.
Although today's agreement will smooth approval of the agreement in Ohio, the companies still face opposition in Illinois and at the federal level.
Several competitors, including Time Warner Telecom, dropped their opposition as a result of today's agreement. But long distance giants AT&T and Sprint plan to continue their campaign against the deal.
Ohio regulators are expected to make a final decision within 30 days. Regulators in Illinois, where staffers have also recommended imposing strict conditions on the merger, will likely make their ruling by the end of April.