The Justice Department gave conditional approval Thursday to two giant telecom mergers that mark a new era in which wireless, cable and...
WASHINGTON — The Justice Department gave conditional approval Thursday to two giant telecom mergers that mark a new era in which wireless, cable and Internet phone companies are increasingly luring customers away from traditional local telephone service.
The department said it would permit SBC Communications’ $16 billion acquisition of AT&T, and Verizon Communications’ $8.5 billion purchase of MCI, provided the companies take steps to maintain competition for some business customers.
SBC said it will adopt the AT&T name once the merger goes through — seeking to capture some of the faded glory of the company that once provided phone service across the country.
The mergers still need the blessing of the Federal Communications Commission, as well as some state regulators, before they can become final.
Under separate agreements that must be approved by a federal judge, Verizon and SBC each promised to lease to competitors high-capacity lines that serve more than 350 buildings. The agreements, to last for at least a decade, would maintain competition by giving businesses in those buildings more than one choice for service.
In permitting the mergers, Justice is reassembling parts of the AT&T system that it broke apart in 1984 when, in an effort to foster competition, it severed the monopoly’s lucrative long-distance arm from its Bell local phone companies.
Verizon and SBC are made up of parts of the “Baby Bell” companies created from the breakup.
The fact that the Justice Department is allowing the mergers to go forward reflects the diminished state of AT&T and MCI, whose long-distance profits have been eaten away by competition from other providers, mobile and local phone companies.
The FCC could act as early as today to approve the mergers, but may impose broader conditions.
The mergers must also pass muster with state regulators. While many states have cleared the deals, company spokesmen said Verizon still needs the approval of at least 10 states, and SBC requires clearance from three.