With FCC approval, AT&T closes BellSouth acquisition

The deal is the largest telecommunications merger in US history

AT&T has closed its acquisition of BellSouth, after clearing a final regulatory hurdle.

Last week, the US Federal Communications Commission announced that it had approved the US$86 billion (NZ$122 billion) deal, after AT&T made a number of concessions to help push the acquisition through, including a pledge to maintain a "neutral network" for two years after the merger.

The deal is the largest telecommunications merger in US history, and the latest in a wave of telecom consolidation that has left only two major players - AT&T and Verizon Communications - standing in the US market.

AT&T announced plans to buy BellSouth in March, saying that it expected to save US$2 billion in annual expenses as a result of the acquisition, but the deal had been deadlocked at the FCC until Friday last week, when two of the regulatory body's commissioners reversed their positions.

Critics have said that the deal would be a step toward the monopoly conditions that existed prior to AT&T's breakup in the 1980s, but the FCC says that consumers would see a number of benefits, including increased deployment of broadband, more competition in the video services market, and enhanced national security.

Michael Copps, a Democratic commissioner who had previously opposed the deal calls it "a modest victory for American consumers," in a statement.

The new AT&T will provide broadband to all customers in the 22 states where it does business by the end of 2007. DSL (Digital Subscriber Line) service in these regions will be offered at US$19.95 (NZ$28.30) per month. AT&T has also agreed to accelerate the deployment of its fiber optic networks to consumers, serving more than one and a half million homes with fiber by the end of next year.

However, the network neutrality provision is perhaps the most important concession made by the telecommunications giant, according to Copps. "It ensures that all internet users have the ability to reach the merged entities' millions of internet users - without seeking the company's permission or paying it a toll," he says.

AT&T plans to rename BellSouth AT&T Southeast, and it will also give its Cingular wireless service a new name, the company says in a statement.

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