Last updated: February 21, 2008 - 1:03am
[SOURCE: Wall Street Journal, AUTHOR: Anne Marie Squeo firstname.lastname@example.org and Amy Schatz Amy.Schatz@wsj.com]
AT&T's plan to buy BellSouth Corp. represents a big bet that regulators will approve a once-unthinkable telecommunications deal both because of the Bush administration's pro-business stance and the increasing competition phone companies now face from cable-television and Internet services. The deal's timing, just five months after SBC Communications completed its acquisition of AT&T, whose name it then adopted, suggests that the management of AT&T sees a rare window of opportunity to pull off back-to-back transactions. Republicans control the White House and Congress. And the new chairman of the Federal Communications Commission has been an unexpectedly strong supporter of the old Bell phone companies. The Justice Department, meanwhile, has been receptive to megamergers in the phone industry. Last year it approved a handful of blockbuster deals without any major concessions, including SBC's deal with AT&T and Verizon Communications's acquisition of MCI. That might leave it hard-pressed to block an AT&T-BellSouth transaction. If the FCC follows "the roadmap they wrote last year during the other two mergers, there aren't a lot of speed bumps on it for AT&T, and definitely not a brick wall," said Blair Levin, a former FCC official who is now a telecommunications analyst at Stifel, Nicolaus & Co. Others warn that the latest deal may represent a bridge too far for the industry, mobilizing a more diverse and vociferous coalition of opponents than past transactions. Last year's megamergers prompted complaints from some consumer groups, business customers and competitors. Now, those foes could join forces with technology companies who fear the Bells will use their market dominance and control over access to the Internet to extract new revenue for speedy delivery of Internet traffic to consumers.
* Reaction from FCC Chairman Martin: "I look forward to working with my colleagues on the Commission to review the applications expeditiously once they are filed. The FCC's primary responsibility is to determine whether the proposed transaction is in the best interest of consumers. We will carefully weigh the information presented, examining any allegations of specific harm in individual markets and the potential benefits for the deployment of new services."
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