Bell Atlantic, GTE try to resolve merger conflict
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WASHINGTON, D.C. - Still seeking merger approval from the government, Bell Atlantic and GTE have floated some ideas to resolve the biggest legal hurdle in their way: GTE has long-distance authority, and Bell Atlantic does not.
The companies last month filed two documents with the Federal Communications Commission listing three methods to resolve the conflict. But each of the methods could hamper network integration efforts designed to present a unified front to users - a frequent problem in telecom mergers - because they involve separating GTE's prized Internet transport division from the rest of the company.
In the first method, Bell Atlantic would place GTE Internetworking and other GTE long-distance operations in a trust, much as government economic officials themselves temporarily give their stocks to an independent trustee to control until they leave office. The merged company would get GTE Internetworking back under its direct control after it had won long-distance authority for all the states in Bell Atlantic's region.
In the second idea, the merged company would actually sell GTE Internetworking to another party but would retain a right to repurchase the Internet division if it won long-distance authority for the Bell Atlantic states within five years. The third idea involves the merged company setting aside GTE Internetworking as a tracking stock, much as Sprint has done and AT&T is planning to do with their wireless units.
Alan Pearce, a former FCC chief economist, gives the sale-with-contingent-repurchase idea the best shot because it gets GTE Internetworking out of the merged company's ownership for a period of time. Pearce, president of Information Age Economics, a consulting firm in Washington, D.C., says the FCC has been adamant that no regional Bell operating company or its successor can own any long-distance transport until it receives long-distance authority. FCC approval of a trust for an RBOC would be "extremely unusual," he says.
