FCC Merger Decisions to Speed Up

Get ready for a wave of final merger rulings from the U.S. Federal Communications Commission (FCC) and a possible reshaping of the telecom and Internet scene by the end of the summer.

FCC Chairman William Kennard today promised that from now on, his agency will try to rule on mergers within six months of receiving official papers from the merger companies. That would place all of the current major carrier and media merger proposals -- except the one announced last week between America Online Inc. (AOL) and Time Warner Inc. -- on track for a yes-or-no vote in the first or second quarter, with the AOL/Time Warner mega-deal not far behind.

Kennard did not tip his hand on how he'll vote on any of the transactions. But he lauded the fact that major transactions are occurring across a range of technologies and markets -- local, long-distance, wireless, Internet and mass media. And he seemed to indicate that the resulting mix of access methods to homes and businesses -- what he called "a virtual Cuisinart of convergence" -- could help to overcome any concerns about market concentration if the mergers are approved.

For example, Kennard said he is resisting calls by consumer groups to open an agency inquiry into so-called "open access" -- the attempt to force cable companies to provide interconnection with all requesting ISPs (Internet service providers). Instead, he said competitors already are successfully building a "network of networks" providing user options via telephone, cable, wireless and satellite lines. "That vision seems to be becoming real, and I think we should put our faith first and foremost in the marketplace," Kennard said.

Kennard did say the AOL/Time Warner deal "will raise some interesting new issues because it's a different kind of merger." But he added that early indications that AOL and No. 1 cable provider AT&T Corp. could narrow their differences over cable open access as a result of the merger are "encouraging."

And he said he hopes that the "open nature of the Internet in narrowband migrates to broadband."

The FCC is due to rule on proposed fusions between Bell Atlantic and GTE, Qwest and U.S. West, MCI WorldCom and Sprint, and AT&T and cable provider MediaOne.

Kennard appeared most concerned about another type of merger -- such as one between CBS and Viacom -- that combines more purely the ownership of mass media. "I'm still quite concerned about the extent of consolidation in the media marketplace," said Kennard. But as a counterpoint, Kennard said the FCC on Thursday will take up the issue of "low-power FM" -- the ability of churches, colleges and small communities to get their own new licenses for alternative media.

Kennard also indicated that two pressing telecom issues will be resolved by March 31. One is the issue of the explosion in area codes, which if left unchecked could leave the U.S. without any telephone numbers by mid-decade.

Kennard said the FCC's Common Carrier Bureau will have a ruling to alleviate the problem by the end of the quarter, though he declined to give a preview.

User groups have pushed for "number pooling," a system that would require the telephone industry to install new switching software in order to parcel out smaller blocks of numbers -- rather than the current minimum of 10,000 at a time -- to both incumbent and new carriers. Bell companies and others have raised concerns about the cost of such a fix.

Kennard also said the agency will rule by March 31 on a proposal by a coalition of local and long-distance carriers to reform access charges -- the per-minute origination and termination fees hidden in long-distance rates.

Another big priority for the FCC in 2000: fixed wireless. Kennard said the agency will continue to look for more radio spectrum to auction off to help "bring the wireless web to consumers." He also said its "very important" that either the FCC or Congress this year resolve the issue of whether all carriers have the right to obtain access to commercial office buildings and residential apartment buildings. But that may come later in the year, as Kennard acknowledged that there are "statutory and constitutional questions" involved in this matter.

Fixed-wireless carriers such as Winstar and Teligent that use rooftop antennas have pushed for a new building-access rule. But commercial building owners have threatened to sue, saying the FCC has no power to regulate real estate and hauling out the U.S. Constitution's prohibition on the "taking" of private property.

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