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June 20, 1997updated 05 Sep 2016 12:26pm

FCC SLAMS THE DOOR ON ANY POSSIBLE AT&T-RBOC MERGER

By CBR Staff Writer

The shadow boxing between AT&T Corp and the FCC continued yesterday, with the FCC Chairman dismissing any notion of an AT&T-RBOC merger – and pointedly rebuffing last weekÆs plea from AT&T chairman Robert Allen last week for such a deal to be not unthinkable. The entire debate stems from, as yet still unconfirmed, reports that AT&T’s plans to acquire local telecoms carrier SBC Communications Inc in a deal valued at $50bn. Yesterday, FCC chairman, Reed Hundt, set out his strongest objections concerning any possible AT&T-RBOC merger. Before any such deal could go ahead the FCC would be have to pass judgement on whether such a deal would boost competition. According to Hundt, no such permission was likely. Hundt responded directly to AT&T Chairman Robert Allen speech of last week which tried to redress the mostly negative reaction to the AT&T-SBC deal. Hundt quoted directly from Allen comments if not to the reported merger plan and spelt out his objection to the proposal and declared An AT&T-RBOC merger is not thinkable. Hundt said he was not surprised by AT&T’s public assertion that such a deal would be in the interests of competition but condemned the move. Adding that he had spoken out now because companies should not be encouraged to spend their time trying to accomplish an unthinkable combination. No one benefits from protracted uncertainty that freezes business zeal into a state of suspended animation, while government authorities mull proposed combinations. Hundt also dismissed Allen assertion that the possible AT&T-RBOC’s deal would be vertical and not horizontal – vertical mergers tend to come under less scrutiny from an antitrust perspective. Hundt maintains that because AT&T and any RBOC would share many of the same customers given both companies dominance in consumer market. The two would also share the strongest brand awareness with the telecoms consumer. Analysis of any hypothetical AT&T-RBOC merger as a horizontal merger is therefore not ill-advised, he said. AT&T has clearly been testing the water with this series of veiled declarations that an AT&T-RBOC merger should be considered. So far it does not seem to be winning support for the plan. In response to Hundt’s speech, Mark Rosenblum, AT&T vice president, suggested that the FCC should hold of from a decision until an announcement is made. [The FCC should] evaluate any such proposal, when and if it is made, on whether or not it accelerates competition in all local markets, he said.

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