A Democratic-controlled Congress might actually facilitate the approval of the AT&T/BellSouth merger without ‘Net neutrality conditions, an investment firm concludes.
This is the contrarian view of Jeffrey Halpern, an analyst at Sanford C. Bernstein & Co. Indeed, UBS Warburg recently issued a bulletin stating that a Democratic Congress could negatively impact the RBOCs.
In a research report issued the day after the elections this week – but before Democrats took control of the Senate – Halpern states that Speaker-elect (Rep.) Nancy Pelosi (D-CA.) and Senate Majority Leader (Harry) Reid (D-NV.) are both supportive of the merger. Moreover, the Communication Workers of America – the lead union for telecom workers and a significant lobbying force in Washington – is pushing hard for the merger’s approval, Halpern claims.
“This powerful combination could potentially bring incremental pressure to bear on the holdout Democratic commissioners at the FCC to yield and accept the significant concessions offered to date by the companies,” Halpern states.
He says the “imposition of onerous, incremental net neutrality rules” has been the biggest sticking point in the FCC’s merger review, which has been delayed twice as two Republican and two Democratic commissioners debate the impact and possible conditions of an AT&T/BellSouth union.
“If Mrs. Pelosi and Mr. Reid maintain their current pro-merger stances, we see the potential for the current gridlock to be broken in the coming weeks,” Halpern says.
Halpern believes the merger could close as soon as the end of November or by the end of December. But that doesn’t mean the ‘Net neutrality issue will suddenly go away.
Quite the contrary…
“It should be noted that while the non-discrimination element of the net neutrality debate may be tabled relative to the AT&T-BellSouth merger approval by the FCC, investors should not mistake such a shift as indicative that it has died,” Halpern states. “We believe that as Congress begins consideration of a sweeping update to the Telecom Act of 1996, net neutrality will remain a hot-button issue and the proposed non-discrimination language the kindling for a fiery debate.”
