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McDowell to Vote on AT&T-Bellsouth Merger

As predicted by Light Reading sources last week, Commissioner Robert McDowell was cleared by the Federal Communications Commission (FCC) general counsel to vote on the merger of AT&T Inc. (NYSE: T) and BellSouth Corp. (NYSE: BLS). (See McDowell May Vote on AT&T-BellSouth Merger.)

McDowell had recused himself earlier due to his recent employment by the CLEC group Incompas , leaving the remaining four commissioners deadlocked at 2-2 along party lines. (See FCC's McDowell: I'm No Dropout.)

The FCC general counsel Sam Feder late Friday issued a memo to McDowell saying that McDowell is “free to participate" if he chooses to do so.

Shortly after, McDowell released a response to Feder's brief.

"I am reviewing his opinion. In the meantime, I strongly urge the participating parties and my four colleagues to resolve their differences in the same amicable and unified manner they did in the similar merger between SBC and AT&T just last year."

AT&T has been trying to get the government's blessing on its BellSouth merger since last March. (See FCC Balks at AT&T/BellSouth Merger Vote and AT&T Rages at FCC Delay.) Sources say pressure has been steadily mounting on the Republican McDowell to take part in the vote so that the deal can finally be done. (See Cisco to FCC: Hurry Up!) Some of that pressure, sources believe, is coming from FCC chairman Kevin Martin.

"It is in the interest of the government and the American people to move this matter forward in a timely fashion," Martin said in his own statement after McDowell was cleared Friday. (See FCC's Martin Preaches Competition.)

Light Reading sources say that if McDowell votes, AT&T will get approval for its merger with fewer concessions than it's already offered to give.

AT&T went into spin-cycle mode Thursday in response to that view. AT&T VP of federal regulatory affairs Robert Quinn argues in a letter to the FCC that if anyone could be hurt by McDowell's participation, it's AT&T. "Given Commissioner McDowell's prior employment by CompTel, which has filed documents opposing this merger, AT&T and BellSouth are clearly the parties to be impacted adversely by any perceived bias or lack of impartiality by commissioner McDowell." But in the same statement, AT&T graciously gave its blessing to McDowell's participation.

The absorption of BellSouth into AT&T will create a Ma Bell-like carrier in a deal now being valued at around $84 billion. (See Ma Bell Is Back!) Opponents of the merger worry that putting so much broadband access into the control of so few hands will lead to trouble for consumers. (See The New AT&T is No Cable Killer.)

— Mark Sullivan, Reporter, Light Reading

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