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Regulators approve AT&T merger bid

"The merger also will enhance national security by creating a stronger and more efficient US supplier of critical communications capabilities."

a joint statement from AT&T and BellSouth Corp

US regulators gave the final approval on Friday to AT&T Inc's takeover of rival BellSouth Corp, the biggest telecommunications merger in US history, saying it will lead to "significant public interest benefits."

The companies immediately said they had finalized the deal that establishes "a premier global communications company committed to driving convergence, continued innovation, and competition in the communications and entertainment market."

The newly enlarged AT&T "will be an engine for innovation, competition, and growth for our customers at home and abroad," said AT&T chairman and chief executive Edward Whitacre.

The Federal Communications Commission (FCC) gave its approval to the deal after the companies agreed to major concessions to break a deadlock.

The FCC, whose action followed approval by the US Justice Department earlier this year, said that the deal would help speed deployment of high-speed Internet in key regions, increase competition for advanced television services, as well as improving wireless service and emergency and disaster response operations.

The purchase, estimated at some US$67 billion when it was announced in March, and now worth some US$85 billion at current stock prices, would create the biggest US telecom group at a time when the industry is shifting its focus to high-speed Internet, television and wireless.

FCC chairman Kevin Martin and commissioner Deborah Tate said the merger makes sense in an era of rapidly shifting technologies, with telecom, Internet and cable television companies all racing into the same market.

"The telecommunications market continues to be a dynamic one. New technologies and services are continuing to transform every aspect of our lives," a joint statement by the companies said.

"The merged ATT/BellSouth promises to offer consumers a wider array of IP [Internet protocol] enabled services, including voice, data, wireless and video services," it said.

"In particular, the merger will enable the combined company to accelerate its deployment of broadband and IPTV in the BellSouth region," the statement said. "The merger also will enhance national security by creating a stronger and more efficient US supplier of critical communications capabilities."

Telecom analyst Jeff Kagan agreed that the changing dynamics of technology justifies the deal, and now AT&T can compete with cable telephone giants such as Comcast.

He said next year "will change the industry on a competitive level. Telephone companies and cable television companies are gearing up to compete in the biggest all-or-nothing battle we have ever seen."

AT&T announced on Thursday that, in the face of opposition of some FCC members, it would agree to changes in its plan, including allowing customers to obtain "standalone" high-speed Internet service at a low cost.

The company also agreed to adopt the principle of "Net Neutrality" which means it would not block or charge extra fees for Web services or sites, such as those operated by Google and Yahoo.

AT&T said it agreed to the changes "in order to break the impasse" even though some of the demands from merger opponents are still being debated in Congress and by other agencies.

The company further agreed to repatriate 3,000 jobs that are currently outsourced by BellSouth outside of the US, and hire at least 200 people in the New Orleans area which is rebuilding from Hurricane Katrina.

It will offer the slowest broadband Internet access on a standalone basis for about US$20 a month, easing concerns it might have too much clout and force consumers into more expensive service bundles.

The merger creates a company with 70 million phone customers and 10 million high-speed Internet users. It also has about 315,000 employees -- though that number is expected to fall -- and combined revenue of an estimated US$121 billion.

The deal gives AT&T full control of Cingular Wireless, the largest US mobile operator, up to now jointly owned with BellSouth.

The deal puts back together much of the "Ma Bell" empire broken up in the 1980s.

But the merger has also drawn fire from consumer groups and others who claim it will limit competition and give the combined company too much control of the Internet.

FCC commissioner Michael Kopps, who held out for several weeks before joining in Friday's 4-0 vote, said the deal was helped by the last-minute concessions.

"We celebrate today not a triumph for huge corporate mergers but a modest victory for American consumers," Kopps said.

"I believe that we have made this transaction at least minimally acceptable to American consumers," he said.

It brings price reductions rather than price increases, more broadband rather than less, a free and open Internet rather than one rife with opportunities to degrade and limit, and numerous other safeguards and protections," Kopps said.
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