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FCC clears telecom giants' 2 mergers

WASHINGTON -- Regulators agreed yesterday to approve SBC Communications' takeover of AT&T and Verizon Communications' purchase of MCI -- deals that allow the nation's biggest phone companies to grow larger.

By 4-0 votes, the Federal Communications Commission approved the multibillion-dollar mergers with conditions that drew praise from rivals of SBC and Verizon. Consumer advocates, worried about shrinking competition, said the conditions didn't go far enough.

The commission required that SBC and Verizon freeze for 30 months the wholesale prices they charge competitors to lease certain high-capacity business lines. It said the two companies had to guarantee for two years that they will sell their high-speed Internet access as a stand-alone service, so customers aren't forced to buy local phone service as well.

The companies also promised not to hinder Internet access to consumers or the free flow of Internet traffic on their networks.

The acquisition by SBC Communications Inc. of AT&T Corp. is valued at $16 billion; the deal with Verizon Communications Inc. and MCI Inc. is said to be worth about $8.5 billion.

FCC chairman Kevin Martin had wanted the mergers, which already have the Justice Department's blessing, approved without conditions. Concerned about competition, the two Democrats on the four-member panel balked. Martin postponed a vote scheduled for Friday and continued negotiations during the weekend to work out a deal.

Critics of the mergers had complained that asset sales in overlapping areas were needed to ensure healthy competition. Democratic commissioner Michael Copps said he would have liked to require more. ''Am I entirely satisfied? No. But this order is now conditioned on provisions designed to address numerous possible harms to competition and to consumers, as well as to protect the openness and innovation that must always characterize the Internet."

''Approval of these mergers undermines more than 20 years of efforts to introduce competition into the residential local and long distance telecommunications market," said Gene Kimmelman, senior director at Consumers Union. ''The FCC promises cross-technology competition with Internet phone service on cable and telephone systems, but the commission has failed to ensure that consumers will receive meaningful choices at fair prices," he said.

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