http://breakingnews.nypost.com/dynamic/stories/A/ATT_BELLSOUTH_MERGER?SITE=NYNYP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2006-10-11-01-21-50

AT&T, BellSouth Deal Nears DOJ Approval


WASHINGTON (AP) -- AT&T Inc.'s $78.5 billion buyout of BellSouth Corp. headed toward expected approval at the Justice Department on Wednesday, clearing the way for a final decision a day later by the Federal Communications Commission.

Three people familiar with the acquisition said late Tuesday that the Justice Department was expected to approve the deal without conditions. A Justice Department official declined to comment on the decision, and the people who disclosed it declined to be identified because the action had not been formally announced.

Justice approval, together with a green light from 18 state governments, means the lone hurdle before the deal goes through is approval by the FCC, which was set to vote on the matter Thursday morning.

The deal would create a telecommunications behemoth with both the largest wireless and traditional wired phone networks in the nation, by far.

Approval would raise concerns from consumer advocates who claim the government is well on its way to reconstituting the old Ma Bell monopoly, which was broken up after years of fighting in the early 1980s.

The House Judiciary Committee's chairman, Rep. James Sensenbrenner, R-Wis., and other members of Congress had asked that the deal not be allowed to go through until details related to two previous telecommunications mergers are settled and other concerns are addressed.

The outcome at the FCC was far from certain. Republican Chairman Kevin Martin circulated an order recommending approval of the deal last month and probably will receive support from fellow Republican commissioner Deborah Taylor Tate.

However, the two Democrats on the commission, Jonathan Adelstein and Michael Copps, are expected to ask that conditions be placed on the deal.

That leaves Robert McDowell, the third Republican on the commission, who before joining the FCC lobbied in favor of competitors to companies like AT&T and BellSouth. McDowell has said he is proceeding as though he is recused from the case.

The combination of San Antonio-based AT&T and Atlanta-based BellSouth would create a company of 300,000 employees with operations in 23 states. AT&T estimates that about 10,000 redundant jobs would be phased out over three years.

The anticipated Justice Department decision would come just seven months after AT&T announced its intentions on March 5 to buy BellSouth - a breakneck pace for a merger of its size and scope. The deal, originally worth $67 billion, has climbed 17 percent in value as AT&T shares have risen in that time. Under the agreement, AT&T is also assuming $22 billion in BellSouth debt.

AT&T is already the largest telecommunications company in the United States, reporting $62 billion in revenue in 2005 and serving customers in Texas, California and the Midwest. BellSouth provides service to nine states in the Southeast and reported $34 billion in revenue in 2005.

Both companies say the combination would help eliminate challenges they now face in their dual management of Cingular Wireless, 60 percent of which is owned by AT&T and the rest by BellSouth.

But critics charge the deal would reduce competition and drive up prices in the telecommunications industry.

Two consumers groups - Consumers Union and the Consumer Federation of America - have urged the Justice Department to block the deal, warning that increasing consolidation in the telephone industry would boost the prices for local, long-distance and cell phone services. Moreover, they argue, limited choices for phone service - dovetailing with a similar merger trend in the cable industry - threatens a reduced variety of broadband Internet services available to consumers.

BellSouth has struggled with recovering from equipment damage and disruptions to its customer base inflicted by Hurricane Katrina. The 2005 storm destroyed 11 of the company's central offices, downed 18,000 telephone poles and incurred costs to BellSouth of up to $900 million.

You know, of all of the trust-busting and government regulation of industries over the years, the American people have probably gained in a tangible everyday way from the forced dissolution of Ma Bell more than any other case.

Hey, maybe we can try it again in another 10 years and start another communications revolution!