FCC official won’t vote on AT&T-BellSouth; merger

Federal Communications Commission member Robert M. McDowell said Monday that he wouldn’t cast the tie-breaking vote on AT&T; Inc.’s proposed purchase of BellSouth Corp., putting pressure on the companies to offer concessions.

The FCC has been reviewing the proposed $86-billion deal for more than seven months. The four other commissioners, two Republicans and two Democrats, have been deadlocked over what conditions to attach.

McDowell, a Republican, had disqualified himself previously because of a conflict of interest. He was working for Comptel, a trade group that includes AT&T; competitors, when he joined the commission in the spring.

But FCC Chairman Kevin J. Martin obtained a ruling from the agency’s general counsel permitting him to vote if he chose to do so. Late Monday, McDowell issued a five-page statement saying he would decline to vote.

McDowell was not impressed with the arguments from the FCC counsel, saying he had expected “body armor” in the legal authorization to vote but instead “was handed Swiss cheese.”

McDowell’s decision increases pressure on all parties, particularly AT&T;, to reach a compromise. Ultimately, analysts expect the deal to be approved.

Martin has said he is willing to approve the deal with no conditions; Democrats Michael J. Copps and Jonathan S. Adelstein want assurances that AT&T; won’t stifle competition.

One key issue is whether AT&T; would be prohibited from giving some companies priority on its high-speed Internet lines for high fees, an issue known as network neutrality.

Another is whether it must keep a lid on wholesale prices that competitors pay to lease its high-capacity lines and equipment so they can serve their customers.

“The onus is now back on AT&T; to negotiate a deal and broker a compromise on special access and net neutrality,” said analyst Jessica Zufolo of Medley Global Advisors.

AT&T; has offered concessions that include freezing some wholesale rates for competitors for 30 months and a low-cost basic high-speed Internet package. But the competitors, some represented by Comptel, have said the offers are inadequate.

One FCC official said the areas of disagreement between the Republicans and Democrats were not easily bridged.

Martin said in a statement that he respected McDowell’s decision. “I will continue to try to work with my colleagues to bring our consideration of this merger to conclusion,” he said.

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Reuters was used in compiling this report.