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Federal Communications Commission
445 12th Street, S.W.
Washington, D.C. 20554
News media information 202 / 418-0500
Fax-On-Demand 202 / 418-2830
Internet: http://www.fcc.gov
TTY: 202/418-2555

This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).

June 16, 2000


Washington, DC – In this era of convergence, we must be mindful of over- consolidation. There will be those that will claim this merger brings us closer to a reemergence of Ma Bell, however, my support is predicated on the applicants’ enforceable commitments to open its traditional local markets to competitors, invest in new markets, and accelerate deployment of broadband technologies. The end result should produce more competition not less.

My support also rests on the merged company’s compliance with section 271. Section 271 is at the heart of Congress’ competitive vision and the statutory framework of the 1996 Act. Thus I could not have allowed this, or any other merger, to violate this core Act provision. In short, the required spin-off makes this merger lawful. Although the terms of the spin-off are intricate, the principles are straightforward. First, Genuity will be owned and controlled by an independent public entity, thereby ensuring a healthy Internet backbone company. Second, whether the merged company, Verizon, ever reacquires Genuity remains an open question, but in any event cannot occur unless and until Verizon opens its local markets to competition as contemplated under the Act. Indeed, the meaningful financial risks and limitations conditioning the spin-off powerfully incent Verizon to expeditiously seek long distance approval in all Bell Atlantic states. Finally, the conditions ensure that Verizon cannot benefit from its interest in Genuity before the Act says so – when there is a meaningful opportunity to compete in its local markets.

By requiring that the Internet backbone asset be spun-off and through the other merger conditions, we have preserved the fundamental incentive structure of the Act, sought to stimulate competition, and to promote more and better service offerings for consumers. For these reasons, I support this merger.