SBC-AT&T Merger Debate Roils Even As FCC Preps Approval

Qwest Communications International complained that SBC has already been making things difficult for it in its western states base but the New York State Public Service Commission (NYPSC) voted unanimously that an SBC-AT&T merger would be a boon to competition in New York State.

Statements by the NYPSC and Qwest tell the story:

-- "SBC already is using its increased market power arising from its acquisition of AT&T to create new barriers to the development of competition," Qwest complained in a letter to the FCC that was obtained by The Washington Post.

-- "This merger will enhance the ability of SBC and AT&T to compete in New York, and it should spur continued growth and technological innovation in an increasingly competitive telecommunications environment in New York," the NYPSC said in a statement.

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Qwest is the smallest of the four former Bell Regional Operating Companies (RBOC) and it recently lost a battle with Verizon Communications, the largest RBOC, to takeover MCI. (BellSouth is the remaining (RBOC.)

The New York regulatory body&s commissioners voted unanimously to approve the acquisition of AT&T by SBC. In its decision, the commissioners noted that AT&T and its subsidiaries serve some 375,000 facilities-based access lines in the state and SBC subsidiaries serve just 3,700 lines.

"The Commission took the position that SBC&s financial strength and experience in the local exchange business will strengthen one of the primary competitors in the New York market," the commission stated. "With access to AT&T&s customers, facilities, research capabilities, and national network, the combined entity will be a significant competitor on the national level."

It was a different story from Qwest with the Denver-based RBOC filing a nine-page comment with the FCC complaining that SBC has targeted Qwest with some tough marketing practices. SBC has denied the Qwest allegations.

Since taking over the helm at Qwest, chief executive Richard Notebaert has launched aggressive forays in the telecommunications market. Earlier this year, he challenged Verizon in a bid to take over MCI and, when that effort failed, Notebaert has been seeking to acquire assets that could be disposed of after the SBC-AT&T and Verizon-MCI acquisitions are accomplished. The FCC, in the interests of fostering competition, often requires new merged telecommunications companies to dispose of some facilities and make them available to competitors.

New FCC chairman Kevin Martin has urged the commission to approve the $16 billion SBC-AT&T merger as well as the $8.5 billion takeover of MCI by Verizon.