BellSouth's final call; AT&T set to take over; Upcoming FCC vote would seal the merger that could cost Atlanta jobs and prestige
BYLINE: MATT KEMPNER; Staff
The last hurdle could be cleared this week for a massive combination of AT&T and BellSouth, spelling the end of Atlanta-based BellSouth as an independent in a fast-consolidating industry.
The Federal Communications Commission was slated to vote on the deal Friday, following the U.S. Justice Department's decision Wednesday to approve the nation's biggest telecommunications combination without conditions.
The Justice Department said the deal would not substantially reduce competition or hurt consumers, despite complaints from consumer groups.
BellSouth could disappear as a stand-alone company and be rolled under the AT&T name with a shuffle of paperwork within hours should the FCC give its blessing. But a true melding of the businesses would be farther off, including eliminating 10,000 overlapping jobs in the coming months and changing BellSouth signs and advertising to AT&T.
Plenty of questions important to the metro Atlanta economy remain, including where the combined company will cut jobs, which of its 6.4 million square feet of office space it might vacate as it consolidates operations and how much of a role it will retain in the community.
It could take three years for the new company to smooth out its networks so that all its customers have access to identical services, said Jan Dawson, a vice president with Ovum, a Boston-based firm that consults for telecommunications companies and some of their biggest customers.
"It's going to be a long time before all the benefits of the merger really filter through to consumers and businesses," he said.
The deal also would give AT&T full ownership of Cingular Wireless, the cellular service provider it owns jointly with BellSouth.
Metro area impact
Locally, some of the job cuts will undoubtedly target certain corporate jobs here rather than blue-collar ones. The companies have said many of the reductions will come through attrition, and that such changes won't come until early next year.
AT&T has said since announcing the merger that its headquarters would stay in San Antonio, while Cingular would keep its home office in Atlanta. Atlanta will remain the hub for AT&T's Southeast regional telephone operations.
Gov. Sonny Perdue suggested in March he would consider leading a mission to Texas to possibly offer AT&T incentives to relocate the combined company's headquarters here. Atlanta Mayor Shirley Franklin said she was willing to go along.
Instead, Perdue hosted a private dinner April 20 at the governor's mansion with Ed Whitacre, AT&T's chairman and chief executive, said Heather Hedrick, a Perdue spokesman.
Hedrick would not say whether Perdue offered AT&T any incentives to move here or keep operations in Georgia, but the governor believes the state and the company "enjoy a great relationship for the future," she said.
Back to the future?
Nationally, an AT&T/BellSouth combination resurrects much of Ma Bell that the Justice Department helped break apart in 1984 over antitrust concerns.
But Dawson, the industry consultant, said the competitive landscape is far different than it was 22 years ago. He cited the rise of cellphones, the Internet, aggressive cable company expansion and phone service over the Internet. "There are all kinds of other forms of competition which are opening up the markets much wider than just the established phone companies in 1984," he said.
Consumer advocates see a worrisome consolidation of telecommunications power, though. They criticized Justice Department officials for not limiting the risks and predicted the combination will hurt consumers.
"The Justice Department has abdicated responsibility to promote the competition it promised when it broke up AT&T 20 years ago," said Gene Kimmelman, senior vice president for Consumers Union.
"In the end, the majority of consumers will end up paying inflated prices that result when Bell companies merge and dominate local, long distance, wireless and Internet services in their territories."
EarthLink, the Atlanta-based Internet service provider, said the Justice Department "abandoned consumers and small businesses by refusing to require even those modest protections" it put in place last year on two smaller combinations: AT&T/SBC Communications and Verizon Communications/MCI.
In a statement released Wednesday, Thomas Barnett, the assistant attorney general in charge of the Justice Department's antitrust division, issued a statement saying, "the proposed transaction is not likely to reduce competition substantially."
"The presence of other competitors, changing regulatory requirements and the emergence of new technologies in markets for residential local and long distance service indicate that this transaction is not likely to harm consumer welfare," the Justice Department said.
Both BellSouth and AT&T praised the decision and voiced hopes for quick approval from the FCC.
The Justice Department is charged with looking at antitrust issues, a narrower view than the mandate before the FCC to consider public interest.
Even critics believe the FCC will approve the AT&T/BellSouth combination. The real question is what, if any, conditions the FCC might set to ease concerns about having so much market power in the hands of one company.
Among the possibilities: requiring that consumers be allowed to buy DSL service even if they don't have phone service with the company; stiffening mandates for the company to lease some lines to local phone and data service providers; and barring AT&T from someday charging higher rates to online content providers who want particularly big pipelines to Internet users.
Republicans hold three of the five seats on the FCC and chairman Kevin Martin has circulated a plan to OK the deal without restrictions. But with expectations that one Republican will bow out to avoid a potential conflict of interest, Martin may offer conditions to placate Democrat commissioners and avoid a tie vote.
The FCC was originally expected to vote today but late Wednesday announced a one-day delay, likely to allow further negotiations over conditions.
Staff writers Walter Woods and Scott Leith contributed to this article.