Telecom deals clear DOJ hurdles

Action last week by the U.S. Department of Justice brings nearer to completion two major telecom deals: SBC's acquisition of AT&T and Verizon's purchase of MCI.

As Network World went to press Friday afternoon, the FCC also was in a meeting that was expected to address the two deals, although it was unclear whether either would be voted upon at that time. Several states still need to approve the transactions.

While approving both acquisitions last week, the Justice Department will require the two merged telecom giants to divest some fiber-optic network facilities. The acquisitions, as originally proposed, would have caused higher prices for some business customers in eight metropolitan areas in Verizon's territory and 11 metropolitan areas in SBC's territory, the Justice Department said.

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Action last week by the U.S. Department of Justice brings nearer to completion two major telecom deals: SBC's acquisition of AT&T and Verizon's purchase of MCI.

As Network World went to press Friday afternoon, the FCC also was in a meeting that was expected to address the two deals, although it was unclear whether either would be voted upon at that time. Several states still need to approve the transactions.

While approving both acquisitions last week, the Justice Department will require the two merged telecom giants to divest some fiber-optic network facilities. The acquisitions, as originally proposed, would have caused higher prices for some business customers in eight metropolitan areas in Verizon's territory and 11 metropolitan areas in SBC's territory, the Justice Department said.

But the agency also seemed to reject arguments made by some other telecom carriers and consumer groups, which said the two mergers would drive up prices for most customers. The Department of Justice's investigation found that the acquisitions are "likely to generate substantial efficiencies that should benefit consumers," the agency said.

The Department of Justice complaint says Verizon and MCI are the only firms that control a direct wireline connection to hundreds of buildings in the metropolitan areas of Washington-Baltimore; Boston; New York; Philadelphia; Tampa, Fla.; Richmond, Va.; Providence, R.I.; and Portland, Maine. The merger would eliminate competition for facilities-based private-line service to those buildings.

Similarly, SBC and AT&T are the only firms that control a direct wireline connection to some buildings in the metropolitan areas of Chicago; Dallas-Fort Worth; Detroit; Hartford-New Haven, Conn.; Indianapolis; Kansas City, Mo.; Los Angeles; Milwaukee; San Diego; San Francisco-San Jose; and St. Louis.

Read more about lans & wans in Network World's LANs & WANs section.