FCC approves merger of SBC, AT&T

The Federal Communications Commission has approved the merger of SBC and AT&T, paving the way for the transaction to close. FCC approval was the final step in the federal approvals process.

FCC announced its approval Oct. 31, the same day the agency cleared another pending telecommunications merger, that of Verizon and MCI.

SBC and AT&T still must receive approval from Arizona, California and Ohio.

“The [FCC] vote demonstrates a recognition that the merger of SBC and AT&T will enhance competition, help bring new technologies to market faster, and provide real benefits to consumers and businesses,” said Edward Whitacre, SBC chairman and chief executive officer, in a prepared statement.

"Combined, SBC and AT&T will deliver superior network services and a portfolio of solutions that will help both businesses and consumers," said David Dorman, AT&T chairman and CEO, also in a written statement. "The new company will also have the scale, scope and balance sheet to deliver on its commitments.”

The companies expect the merger to close later this year.

Both pairs of companies are subject to conditions the FCC has set to maintain competition. They agreed to the conditions voluntarily, and the commission created a set of enforceable restrictions.

Among the restrictions:

* The companies are not to seek an increase in state-approved rates for unbundled network elements for two years.

* The companies will implement a “Service Quality Measurement Plan,” which will provide the FCC with quarterly performance results for interstate special access services.

* The applicants agreed not to increase for 30 months the rates paid by existing AT&T customers in SBC’s region or MCI customers in Verizon’s region for some local private line services.

* SBC/AT&T and Verizon/MCI committed not to provide special access services for 30 months that are not generally available to other similarly situated customers to themselves, their interexchange affiliates, each other or their affiliates.

* For three years, the companies will maintain peering arrangements with at least as many providers of Internet backbone services as they did in combination on the merger closing dates. Peering arrangements are agreements among Internet providers to exchange traffic.

* Within one year of the merger closing, the companies will provide Digital Subscriber Line services to their customers without requiring them to also purchase circuit-switched voice telephone service. The companies will make the offering for two years from the time it is made available in a particular state.