FCC to Approve SBC-AT&T, Verizon-MCI Mergers

The head of the Federal Communications Commission (search) has asked agency staff to draft orders approving two big phone company mergers — SBC Communications Inc. (SBC) and AT&T (T), and Verizon Communications Inc. (VZ) and MCI Inc (MCIP).

FCC Chairman Kevin Martin wants the commission to take a final vote on the deals next month, according to two people with firsthand knowledge of the issue. They were authorized to speak about the drafts only on the condition of anonymity.

The sources did not say what conditions might be placed on the mergers.

SBC's deal to acquire AT&T is valued at $16 billion while Verizon is offering $8.5 billion for MCI.

SBC and Verizon are the leading former Baby Bells, or regional phone companies, and the mergers with AT&T and MCI would add long-distance as well as lucrative business customers.

AT&T and MCI have both been losing revenues and long-distance customers to competition from the Bells, cell phones and Internet-based phone service, which all offer unlimited national calling for a set rate.

Martin's request for drafts of approval signal his intention to press ahead with the mergers despite the 2-2 split between Republicans and Democrats on the commission. The White House has not given any hint as to when it might fill the FCC's open fifth seat, which will go a Republican.

The Justice Department (search) also will have to sign off on the mergers.

Analysts expect the mergers will come with conditions that could slow the approval process.

"Once you eliminate AT&T and MCI, the fear is that the Bells will be able to establish a bottleneck to large business users," said Jessica Zufolo, senior policy analyst with Medley Global Advisors.