Verizon May Face Limits on MCI Deal

New York regulators may require Verizon Communications Inc. to sell some MCI Inc. operations in the state and freeze certain prices to blunt “anti-competitive” aspects of the carriers’ planned merger.

The possible conditions on the $8.44-billion deal came in a report from the New York Public Service Commission, which seeks public comment through Aug. 22. State commissioners will vote at a later date on whether to impose any conditions.

Regulators want to ensure that the acquisition by Verizon -- the largest U.S. telephone company -- won’t lead to higher phone-service prices for customers or make it harder for other carriers to compete. New York Atty. Gen. Eliot Spitzer in May urged federal regulators to require Verizon to remove restrictions on purchases of certain Internet services.

“The anti-competitive aspect of the merger appears obvious” with regard to wholesale communications services, the New York Public Service Commission staff wrote in the report.

Separately, SBC Communications Inc.’s planned $16-billion acquisition of AT&T; Corp. doesn’t warrant any conditions in New York, the agency said.

Both planned takeovers require approval from the Federal Communications Commission and Justice Department as well as various states, including New York. The state is Verizon’s largest market and home of the firm’s Manhattan headquarters.

The commission report also said New York regulators were considering requiring Verizon to freeze prices for three years for smaller carriers that were MCI wholesale clients, a move aimed at maintaining competition for customers of those carriers.

Verizon has received approvals for the MCI purchase from 10 out of about 26 states, Verizon spokesman Brian Blevins said Thursday.

California regulators, who also have authority to impose conditions on telecommunications deals, are still reviewing the Verizon-MCI and SBC-AT&T; proposals.