Saturday, November 04, 2006

"Election's Tally Holds Intrigue For AT&T Deal"

The prospect of BellSouth being bought out by AT&T has been a topic of discussion on these pages, much of it unhappy but resigned. Mostly this merger has been seen as a done deal--the prevailing regulatory atmosphere has been such that it was hard to imagine any merger that wouldn't be approved by the current administration with little concern for consumer concerns.

But in the last few days there has been chatter online about the FCC's inability to come to grips with the issue--the vote to approve the merger has been delayed three times. The problem is that the deciding vote, a recently appointed Republican, has recused himself from participation as a consequence of having recently worked with a company that has an interest in the outcome. The consequence is that the FCC has been deadlocked on a vote setting conditions for the merger with the Democrats on the panel holding out for conditions that would ensure that the reconstituted AT&T would not abuse its monopoly power to set high entry level charges and that it would adhere to the traditional common carrier rules--rules that enforce net neutrality. AT&T has balked at the latter condition. Scuttlebut had been that, given the overall climate, AT&T would get its way.

But that climate may be changing soon:

If Democrats gain control of the House or - though less likely - the Senate, that would change the regulatory climate for telecom mergers, analysts say.

"AT&T is taking somewhat of a risk (by holding out for the fewest conditions) in that potential success by the Democrats could embolden the opposition," Merrill Lynch analyst David Janazzo wrote in a note to clients.

If Democrats win the House, then in January they would take over the chairmanships of committees that oversee telecom regulation. Levin says congressional hearings then "wouldn't be fun" for AT&T.

That gives you one more thing to think about as the returns come in Tuesday night.

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