Fcc Approves Merger Of Bell Atlantic, Nynex $23 Billion Deal Creates Phone Giant With 39 Million Lines In Northeast
Federal regulators approved the merger of Bell Atlantic and Nynex on Thursday, creating a local telephone colossus with 39 million phone lines from Maine to Virginia.
Approval by the Federal Communications Commission had been a foregone conclusion since the two Regional Bell companies pledged July 19 to make it easier for rivals to compete in local phone markets.
“On balance, these pro-competitive benefits outweighed the potential harms to competition from the merger,” the FCC said in a statement Thursday.
The merger, valued at $23 billion when it was announced in April 1996, would create the second-biggest phone company behind AT&T Corp. The new company, to be called Bell Atlantic, will serve 13 states and the District of Columbia.
The consolidation is the second-largest in U.S. history, exceeded only by the $25 billion combination of RJR Nabisco and Kohlberg Kravis Roberts & Co. in 1989.
In the most important condition to protect competition, Bell Atlantic and Nynex agreed last month that the combined company would let potential rivals either lease parts of the local phone network or plug into the network at lower prices. Rivals need to do this to offer local service.
The companies also agreed to test their computer systems, known as operator support systems, and to develop uniform systems through the company’s territory to make it easier for competitors to process new customers, bill them and complete repairs. This would also help competitors who buy local phone service to resell.
These and other conditions agreed upon would make it easier for potential rivals such as AT&T and MCI to break into the local phone business, regulators have said.
The competitive conditions will last four years and are enforceable by the FCC, Hundt said. If the combined company violates the conditions, it could be ordered to comply or fined by the FCC.
Consumer groups have opposed the merger.
“It’s a valiant effort by the FCC, but this is a merger that never should have been approved,” said Gene Kimmelman, co-director of the Consumers Union’s Washington office. “This invites one company - the merged Bell Atlantic-Nynex - to be the dominant player in offering onestop communications shopping and that may deter anyone from competing for the broader residential telephone market from Maine to Virginia,” he asserted.
The Justice Department approved the merger with no strings attached in April, concluding that the combination of the two Baby Bells along the Eastern seaboard does not violate antitrust laws.
xxxx MERGER DETAILS Here is a profile of the new Bell Atlantic, a merger of Bell Atlantic and Nynex: Total assets: $53.3 billion Net income: $3.4 billion Employees: 141,600 States served by local phone company: 13 and the District of Columbia States served by cellular phone operations: 19 and the District of Columbia Telephone lines: 39 million. Domestic cellular customers: 5 million