FCC Revises Special Access Language in AT&T-BellSouth Merger Order
Bowing to Qwest and Verizon concerns, the FCC revised a special access condition in the AT&T-BellSouth merger agreement. The change eliminated a ban on other Bells getting access to reduced AT&T special access prices unless they offered similar prices to their own customers.
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The FCC made the revision in an order issued late Mon. The Commission said the new language also cuts from 48 to 39 months the duration of the rest of the special access condition, which caps prices and terms for AT&T services such as DS-1 and DS-3 used for special access. As a result, “any company can now take advantage of these special access services,” FCC Chmn. Martin and Comr. Tate said in a joint statement. Martin and Tate had expressed concern about the original wording’s legality shortly after the merger order was approved in late Dec.
Along with its Mon. revision, the FCC released the text of the merger order, which some said was held up by disputes over the special access language. Martin and Tate hinted that they might not approve the tariff AT&T would have to submit to implement the original commitment. As a result of a Qwest petition for a writ of mandamus, the U.S. Appeals Court, D.C., has been looking at the issue. And Verizon had indicated that, as a result of the special access condition, it would appeal the merger order once it was released. Qwest withdrew its mandamus petition Tues., telling the court that litigation isn’t needed now that the FCC has “eliminated the unlawful condition.”
The change apparently was negotiated between AT&T and the FCC because it was based on new language submitted by AT&T. The FCC said AT&T filed a letter Mon. asking the FCC to amend the special access condition by removing the reciprocity language and reducing the commitment’s duration. “On reconsideration, we conclude AT&T’s proposed revision… addresses the questions raised about the legality… and reduces the legal uncertainty associated with AT&T tariff filing required to effectuate the initial special access condition,” the FCC said.
Stifel Nicolaus said “this is modest good news for Verizon and Qwest, as they will no longer be subjected to the reciprocity requirement in order to benefit from the AT&T commitment to cut certain special-access rates.”
The FCC acted “wisely” in recognizing that the special access merger condition “discriminated against some carriers and was on extremely shaky legal ground,” a Verizon spokesman said: “A merger condition cannot be used as a backdoor way to impose requirements on a nonparty to the merger.” The order’s release gained little comment from the FCC or industry lobbyists. “I think everyone had a sense there would be an in-between place on this,” said a source.
Competitive carriers meanwhile credited Comrs. Adelstein and Copps for the net neutrality, forbearance, special access pricing and other competitive conditions attached to the merger agreement. “The commitments they insisted on will help mitigate the clear anticompetitive harms that will result from approval of this merger,” said CompTel Pres. Earl Comstock. XO Communications Senior Vp Heather Gold said: “Without the tenacious leadership of Commissioners Copps and Adelstein in addressing the anticompetitive harms posed by this merger, customers in the AT&T/BellSouth regions would have seen a reduction in choice and an increase in price.”