SBC-AT&T Gets N.J. Okay, But Verizon-MCI Sees Staff Opposition in Va.
The telecom mega-mergers’ progress in the states saw 2 major developments: N.J. regulators approved the AT&T- SBC merger with only one significant condition, but the Verizon-MCI merger hit a rough spot in Va., with the commission staff urging denial or major conditions unless the companies can show detailed specifics of how the deal would benefit Va. citizens.
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The N.J. Board of Public Utilities Wed. approved the merger provided the merged company keeps the AT&T Labs, AT&T Network Operations Center and AT&T Enterprise Operations in the state. SBC committed to doing so. With that commitment, the BPU concluded that its “comprehensive analysis determined there would be a positive impact on competition, customer rates, service reliability and that there would be a better environment for job retention.” BPU Pres. Jeanne Fox said SBC’s commitment to maintaining AT&T’s facilities in N.J. “was critical to our approval of the merger.” The companies praised the BPU members for “their recognition of both the changing dynamics of the communications industry and how this merger will benefit customers and the New Jersey economy.” N.J. is the 31st state to approve the merger, with 5 states still outstanding.
Meanwhile, the Va. Corp. Commission staff advised against approving the Verizon-MCI merger because the application “provides little, if any, Virginia-specific information or economic studies on which the Commission can make a determination” about whether the deal will jeopardize adequate service at reasonable rates for the public. The staff said the companies haven’t met the burden of proof that the merger will specifically benefit Va. citizens.
The staff recommended either denial without prejudice so the companies can refile with the additional information, or imposition of 4 major conditions: (1) Subject Verizon’s inter-LATA intrastate long distance services to the same monitoring and reporting requirements imposed on interexchange carriers. (2) Require Verizon to resolve service complaints within 10 business days, when possible. (3) Require that Verizon treat MCI as a nonaffiliated CLEC for purposes of making local interconnection agreements and for conducting the high- capacity UNE wire center impairment analysis required by the FCC Triennial Review Remand Order. (4) Require that Verizon track and report the Va.-specific merger cost savings for 3 years.
The staff said it’s also concerned that MCI’s merger with Verizon, together with AT&T’s merger with SBC, will remove the nation’s top 2 long distance competitors from the Va. scene, which might cause long distance rates to rise. It also suggested that since federal authorities face similar competition issues with the merger, the commission should hold off action until it can evaluate the impacts on Va. of any federal merger conditions.