FCC may lose its power over high-profile mergers

Lawmakers are stepping up efforts to strip the FCC of its right to approve high-profile telecommunications mergers, even as the agency considers two of the largest mergers in telecom history.

John Borland Staff Writer, CNET News.com
John Borland
covers the intersection of digital entertainment and broadband.
John Borland
2 min read
Lawmakers are stepping up efforts to strip the Federal Communications Commission of its right to approve high-profile telecommunications mergers, even as the agency considers two of the largest mergers in telecom history.

Led by senators Orrin Hatch (R-Utah) and John McCain (R-Arizona), a group of powerful legislators is trying At the crossroadsto remove federal communications regulators from the review process that has stalled the pending mergers of SBC Communications and Ameritech, and Bell Atlantic and GTE for close to a year.

Late last week, Sen. Hatch said he would not oppose two bills that aim to limit FCC merger reviews to six months if the authors agreed to rework the bills' language to ensure the FCC had no explicit authority over telecom mergers.

"The goal is to clarify that this in no way gives the FCC any role [in approving mergers]," said Jeanne Lapatto, a spokeswoman for Sen. Hatch.

Those bills are now scheduled for a vote Thursday.

Hatch and McCain, however, are pressing forward with their own bill that would remove the FCC from the merger review process entirely.

That legislation, dubbed the Telecommunications Merger Review Act of 1999, would give the power to approve mergers between large telecommunications companies to the Department of Justice and the Federal Trade Commission.

Both lawmakers say the FCC has abused the authority given it under the 1996 Telecommunications Act, using its mandate to protect the "public interest" to impose broad conditions on previous mergers.

McCain has also been sharply critical of the way the FCC has handled the proposed merger between SBC Communications and Ameritech, saying the companies have been treated unfairly.

FCC chairman William Kennard, who has borne the brunt of criticism from McCain and other congressional leaders, has consistently defended the FCC's role in approving mergers.

"The Commission needs to be particularly careful in evaluating mergers during this time of change and uncertainty, because a merger, once consummated, cannot easily be broken up," Kennard told lawmakers in an FCC oversight hearing last month. "You can't unscramble an egg."

Communications regulators are charged by the 1996 Telecommunications Act to create competition in the industry, not just guard against monopolies, Kennard argued. Other agencies that do not deal daily with communications issues aren't armed with enough expertise to tackle complex communications issues, he added.

The FCC is now in the middle of an unprecedented review of the merger between SBC and Ameritech, following Kennard's plan that the company and other industry observers suggest possible conditions for the pairing. Before entering a new round of negotiations with the companies in April, Kennard had said he had "serious concerns" about the deal.

That merger deal, originally announced in May 1998, is expected to be approved by mid-summer with some type of conditions.

The FCC also is reviewing the merger of Bell Atlantic and GTE, announced in July 1998.