Dept of Justice Approves Two Big Telecom Mergers

[SOURCE: National Journal's Insider Update, AUTHOR: David Hatch]
The Department of Justice approved the SBC-AT&T and Verizon-MCI mergers Thursday. The final hurdle now is approval by the FCC, which is scheduled to take up the matter at a public meeting this morning. The Justice Department's Antitrust Division did condition the deals on a relatively modest requirement that the merged companies divest portions of their fiber optic lines to competitors in 19 metropolitan areas. The department said the transactions, as originally proposed, would have resulted in higher prices for some business customers in eight metropolitan areas in Verizon's territory and 11 in SBC's region. The department's decision requires Verizon and SBC to each divest high-speed telecom connections to more than 350 buildings in their respective territories. The divested facilities would be sold to single buyers in each city using long-term leases known as "indefeasible rights of use" -- IRUs -- that are common in the industry. The Washington Post reports that the Justice Department did not impose conditions that directly affect residential consumers, a decision that reflects the view that people increasingly can get local telephone service from cable, Internet and mobile phone providers. Jonathan Rubin, senior research fellow at the non-profit American Antitrust Institute, said the conditions do not go far enough. "The [Justice Department] appears to have failed to impose conditions aimed at preventing a duopoly of dominant end-to-end networks from developing to the detriment of the ordinary consumer," he said. Earl Comstock, president and CEO of CompTel/ALTS, an association representing Bell competitors, complained that the Justice Department’s decree "promotes and protects the Bell companies at the expense of American consumers." Noting that AT&T and MCI were Bell competitors, he charged that the department’s divestiture requirements are a "fig leaf" that would benefit "a few businesses in a few hundred buildings in the country." [For reaction from Consumers Union, see story below.]
http://www.njtelecomupdate.com/lenya/telco/live/tb-IMUI1130452546559.html

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* Justice Dept. Approves Two Big Telecom Deals
http://www.nytimes.com/2005/10/28/technology/28phone.html?pagewanted=all
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