FCC Approves Telecom Mega-Mergers

The FCC on Monday approved two mergers that will shake up the telecom industry: Verizon's $8.45 billion joining with MCI and SBC's $16 billion acquisition of AT&T. The U.S. government agency said that consumers would benefit from both mergers.

Among the positives are the increased performance and reliability of what the government regulator called "complementary networks." The FCC also noted that both newly merged companies would remain U.S.-owned as another point in favor of the deals.

The FCC found that the concerns interest groups brought to the table, such as the two companies controlling a large portion of Internet access for Americans, were unfounded.

As a stipulation, both SBC -- soon to be known as AT&T -- and Verizon must offer DSL access without the purchase of a phone line for two years after the agreement. Pricing caps must also be put into place on certain network services for the same period.

In addition, the two companies agreed to Internet neutrality rules to ensure that third parties could peer with them without paying exhorbanent fees, and prevent disagreements such as the one between Level 3 and Cogent earlier this month.

The FCC unanimously approved both mergers, although some saw the provisions as unnecessary.

"I believe that the affected markets would remain vibrantly competitive absent these conditions," FCC Chairman Kevin Martin wrote in a statement. "Nevertheless, the parties involved have chosen to make these commitments now in order to obtain the certainty of immediate Commission approval for their mergers."

Fellow Republican commissioner Kathleen Abernathy also said the conditions were unnecessary, calling it "regulatory oversight."

The Democratic commissioners disagreed. "I also am pleased that these conditions now express a measure of concern for the effects of these mergers on competitive wireline providers," Commissioner Michael Copps wrote.

However, in a board where only four of the five positions are filled -- two by Republicans, and two by Democrats -- all parties involved realized that a compromise was necessary to ensure approval.

Both SBC and Verizon were satisified with Monday's decision.

"After two federal reviews and strong approvals by shareholders and the international community, it is clear that this combination is undeniably in the public interest," Tom Tauke, Verizon executive vice president, said of his company's deal.