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FCC dissension likely over telco mergers

FCC commissioner Michael Powell says regulators should be wary of exercising too much control over mergers, which may indicate dissension inside the agency.

In a move that may indicate dissension inside the Federal Communications Commission over the current round of telecommunication mega-mergers, FCC commissioner Michael Powell said today that regulators should be wary of exercising too much control over mergers.

In a speech to the Practicing Law Institute's conference on Telecommunications Policy and Regulation, Powell said the FCC was often tempted to go too far in imposing conditions on telecommunications company mergers.

While he never mentioned the companies by name, the speech was a clear reference to mergers between Bell Atlantic and GTE, SBC Communications and Ameritech, and AT&T and Tele-Communications Incorporated--all of which are currently under scrutiny by regulators.

"More than in most situations, regulators have merger applicants by the throats," Powell said. "But a merger agreement should not be the opportunity to bring out every concern regulators have with the companies."

Powell said regulators needed to focus their merger inquiries tightly, dealing only with issues raised by the mergers themselves, not with issues that already exist in the marketplace.

He warned that regulatory bodies such as the FCC do not have as clear a picture of what is likely to happen in the marketplace as companies themselves.

"Only private firms suffer the consequences of misplaced bets," Powell said. "As a consequence, our crystal ball is much cloudier than theirs."

The speech seemed to indicate a much more hands-off approach to the pending telco mergers than has been coming from other quarters in the FCC.

Commissioner Gloria Tristani said in another recent speech that she was highly skeptical of the Baby Bells' arguments that they could not compete effectively in a global market without joining forces.

"In all candor, I'm a little skeptical of the notion that a $25 billion company needs to get bigger before it can compete successfully out-of-region," Tristani said, focusing on SBC's statements in support of its merger.

Top FCC staffers also have said they are worried about the Baby Bell mergers creating a "Bell East and Bell West." If the local phone mergers do go through, the two new companies will own about two-thirds of the local access lines in the country.

Powell, who is traditionally one of the more conservative members of the commission, could be overruled if his fellow commissioners believe that the mergers will not serve the public interest. Today's speech appeared to be an attempt to establish publicly his own philosophy on the topic, previewing what could be a tense final review of the mergers over the next year.