U.S. Sets Conditions for Telephone Pact : Communications: Deregulation is key to deal among Sprint and German and French companies.

The United States will only approve an alliance between Sprint Corp. and German and French state telephone companies if markets there are deregulated, the head of the Federal Communications Commission said Monday.

FCC Chairman Reed Hundt, after meeting German Post Minister Wolfgang Boetsch for talks on telecommunications liberalization, also said the United States was very concerned about moves in Europe to restrict foreign access to European information highways.

“We are trying to make the decision in the first half of 1995 and we are absolutely committed to making the decision this year,” he told reporters on the sidelines of a meeting with German telecommunications industry officials.

The FCC will use its earlier decision to approve the alliance between Washington-based MCI Communications Corp., the No. 2 U.S. long-distance company, and British Telecom, as a precedent.

“We have made no bones that we will use this as a precedent,” Hundt said. “In that case we sought to make sure that MCI would not receive special treatment in the U.K. to the disadvantage of other American companies.”

Kansas City, Mo.-based Sprint, the No. 3 U.S. long-distance carrier, has asked for approval to sell 20% of the company for $4.2 billion to Deutsche Telekom and France Telecom.

But the deal has come under fire from other American and European telephone companies that say it would impede competition and give Sprint an unfair advantage in Europe over its American competitors--MCI Communications and American Telephone & Telegraph.

“These comments have urged us to examine very seriously the openness of markets. We plan to look beyond the rhetoric at the Realpolitik of competition in Europe,” Hundt said.

Commenting on the telecommunications summit of the Group of Seven industrial powers next month in Brussels, Hundt said the United States was worried about efforts to restrict foreign involvement in European multimedia and data networks.