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Senator calls FCC merger review unfair

A top Senate telecommunications lawmaker issues a scathing indictment of federal regulators' merger review process, and demands the system be changed.

A top Senate telecommunications lawmaker today issued a scathing indictment of federal regulators' merger review process, demanding that the system be changed as soon as possible.

A letter from Senate Commerce committee At the crossroads chairman John McCain (R-Arizona) to Federal Communications Commission chairman William Kennard targeted regulators' recent hearings on the pending merger between SBC Communications and Ameritech.

At one public hearing last week, a senior FCC staff official indicated that the agency was leaning toward imposing conditions on the merger, such as requiring the Bells to open their local markets more fully to competitors.

"The staff reviewing the application had tentatively concluded that this proposed license transfer, if not ameliorated by sufficient conditions, flunks the public interest test," said Thomas Krattenmaker, a FCC official overseeing the merger review.

That comment immediately raised red flags in congressional circles where criticism of the FCC's telecommunications policies is already common.

McCain sent the letter to Kennard today, saying the commission's statements had undermined the integrity of the merger review.

"Recent Commission staff statements about the SBC-Ameritech merger request now pending before the Commission call into question the competency of the Commission's management and the credibility of its processes," McCain wrote.

McCain called for Kennard to make quick changes in the way the review is being handled. He also pointed out that one of the key staffers involved in the process was a former executive at AT&T, the long distance giant that has in the past spoke out against the Baby Bell merger. The Bells will compete against AT&T for long distance dollars once they are allowed into the U.S. market.

"You must do whatever is necessary to remove the institutional unfairness and prejudgment that has been permitted to taint this proceeding," McCain wrote. "It is impossible to imagine that the head of any federal agency would permit the fairness of the agency's decision-making personnel, and the integrity of the agency's decisions, to appear so compromised."

McCain said his committee would "pursue this matter further" if Kennard's response to his letter didn't include specific steps to resolve the problems.

An FCC spokesman said that Kennard would respond in a "timely fashion," but that the chairman also wanted to "express full confidence in the expertise and integrity of the commission's professional staff."

McCain has been one of the FCC's most vocal critics over the last few months, and has been one of the leading proponents of scaling back the agency's power to regulate telecommunications companies.

The FCC's review of the SBC-Ameritech merger is in its final phase. Kennard brought the two companies in for a new round of negotiations last month. Commission staff and the Bells are scheduled to discuss possible conditions to the merger deal through late June.