WPC " UzU-,.n4|l`DBG`J~P9%b6vH_eNnao^KQN`e}w>}[q}xi `~+ot .3;xx$Cxo{>VP >JDRKD$![Q#.Ȇ;H~Q}FTH ^7a?ZPչ2T0:\DsKѰEsTFtxܲmCGE,pn @_0JnO:$eӅnjamƢY<د0J^Y'jMɭ:=9D5 6jk))K7~t;(k{FSXJ氵 $"Ez'-y\f~m L7VB*rң'emMU> 0<8 0t 0~ 0 0 0 0  0 0$ 0 0 0< 0 0&$UN 0f 0 D+ 0 0(* 0R AQM<<<<<<<<<<<<<<<<<<<<@ 0~P#!UN %=!NC!^ E!w@Q!4!! m!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 0L!\  `&Times New Roman<:Default Para<~:1Bullet List X    . 5+ ` hp x (#5  XXX    8.` hp x (#8   . <q:2Bullet List    5+` ` hp x (#5  XXX    A7X` hp x (#A  <q:3Bullet List    5+ ` hp x (#5  XXX    D:X` hp x (#D  <q:4Bullet List `   5+ ` hp x (#5  XXX    G=X` hp x (#G  <q:5Bullet List    5+h ` hp x (#5  XXX    J@X` hp x (#J  <q:6Bullet List    5+ ` hp x (#5  XXX    MCX` hp x (#M  <q:7Bullet List h   5+ ` hp x (#5  XXX    PFX` hp x (#P  <q:8Bullet List    5+p ` hp x (#5  XXX    SIX` hp x (#S  8%x6Body Text  XXX  260Footer  (#XXXG=X` hp x (#G<:Page Number 260Header  (#XXXG=X` hp x (#G&$1' FCC Local And State Government Advisory Committee (Carole Greetham 0 .  nLSGAC RECOMMENDATION ON TELECOMMUNICATIONS MERGERS(hH  Z 6Times New Roman Regular(q2m$ 1!    3*X3X*3*  (q2m$ 1!    3*X3X*3*  'dxd Level 1 Level 2 Level 3 Level 4 Level 5(q2m$ 1!    3*X3X*3*  ($(q2m$ 1!    3*X3X*3*  C<< c3|x(V$    3(X3X(3(HP LaserJet IIP,,,,0(hH  Z6Times New Roman Regular3Xs& DEDDDDUHH&U>c$"Small Circle"0 1!    3*X3X*3*  _T@X` P hhXhpXXTX2X* 82Xdd8@ FCCLocalAndStateGovernmentAdvisoryCommittee  @88AdvisoryRecommendationNo.17@   StatementOfPrinciplesToBeConsideredInAnalyzing t @Z Z ProposedTelecommunicationsMergers  ` @& PREAMBLE  8      TheCommunicationsActgrantstheCommissionthepowertodeterminewhethertheapplicantsinamergerhavedemonstratedthatgrantingapprovalofthemergerwouldservethe publicinterest.42U.S.C.214(a),310(d)(1999).WhiletheDepartmentofJustice( _DOJ_)sharesconcurrentresponsibilitywiththeCommissionwithrespecttotheantitrustissuesarisingfromthesemergers,theCommissionsresponsibilityisbothbroaderanddistinctfromthe_DOJ_srole.See   U.S.C.18;15U.S.C.21(a)(1999).First,theCommissionmustconsidertheeffectofthemergeroncompetitioninweighingthepublicinterest.Applicationof_WorldCom_,Inc.andMCI   CommunicationsCorp.forTransferofControlofMCICommunicationsCorp.to_WorldCom_,Inc.,   CCDocketNo.97211,MemorandumOpinionandOrder,FCC98225,12.Second,theCommissionsinquirycanextendbeyondantitrustprinciplesandjudicialstandardsofevidence.Id. \ at13.Third,theCommissionmustimplementandenforcethenationalpoliciesarticulatedinthe1996TelecommunicationsAct.Id. 4   The_LSGAC_ԀbelievesthattheCommissionhasauniqueandessentialresponsibilityinevaluatingwhethermergerswouldservethe publicinterest,andthattheCommissionsroleinreviewingmergersshouldnotbecurtailedinanyway.Thus,the_LSGAC_ԀbelievesthatthepoweroftheCommissiontoreviewmergersundertheCommunicationsActshouldbepreserved,andthattheCommissionshouldexercisethefullextentofthispowerindeterminingwhethermergerswouldservethe publicinterest.  Inthe1996TelecommunicationsAct,Congresssetforthseveralguidingprinciples:        thattelecommunicationsmarketsshouldbeopentocompetition; X          thatuniversalserviceshouldbepreservedandadvanced;and D!       0  thatadvancedtelecommunicationscapabilityshouldbedeployedtoallAmericans.0" (#(# 47U.S.C.254,706.The_LSGAC_ԀbelievesthattheCommissionsreviewofmergersshouldfullyincludeandimplementtheseprinciples.  Recently,ChairmanWilliamE._Kennard_Ԁannouncedthatthefollowingthree CsshouldgovernCommissionaction:competition,communityandcommonsense.The_LSGAC_ԀbelievesthesethreeconceptscreateaframeworkforCommissionreviewofmergers. h+&* _  TheLSGACadoptsthefollowingstatementofprinciplesthattheCommissionshouldincorporateinreviewingwhetherproposedmergerswouldservethe publicinterest.WhiletheLSGACdoesnottakeanypositiononanyspecificmerger,itprovidesspecificexamplestoillustratetheprinciples.@% PRINCIPLES  L  1.  Themergershouldprovideshorttermandlongtermcompetitivebenefitstostateandlocal $ t communities.2.  Themergershouldnotadverselyaffectcompetitioninstateandlocalcommunities.  8  0    a.  Forexample,insomecommunities,subsidiariesoftelecommunicationsprovidershave   builtandoperatecablesystemsthatcompetedirectlywithincumbentcablecompanies.WhereAmeritechNewMedia(thecablearmofAmeritechCorporation)hasactivelybuiltandoperatedcablesystems,competitivepricesandserviceshavebeenoffered.CustomershavebenefittedfromthecompetitionthatAmeritechNewMediaprovidesinthreeways:1)lowerratesandimprovedprogramofferings;2)customerservicethatissuperiortothatprovidedbyothercableoperators;3)theaccelerationoftherebuildofcablesystemsbelongingtoincumbentcableoperators,providingmorechannels,andamorereliableandhigherqualitypicture.Whenincumbentcableoperatorsarefacedwiththiscompetition,theymustattempttomeetorevenexceedthenewentrantslevelofserviceorbethreatenedwithlossofmarketshare. (#(# 0        Cablecompetitionincommunitiesshouldcontinuetobeencouraged.IfthemergerbetweenSBCCommunications,Inc.andAmeritechCorp.resultsindecreasedcompetitioninthecablemarket,thefailuretohonorexistingcablefranchises,ortheendofanycommitmenttoexpandandservenewcommunities"residentialcustomersinstateandlocalcommunitieswouldbeadverselyaffected. (#(# 3.  Inevaluatingthemerger,theCommissionshouldincorporatetheinterestsandexperiencesof l stateandlocalcommunitiesthatwouldbeaffectedbythemerger.Thus,theLSGACurgestheCommissiontoconductlocalforumssuchastownmeetingsinarepresentativesetofaffectedcommunities.4.  TheCommissionshouldevaluatethepastconductofthemergerapplicantsinstateandlocal $X" communities.Forexample,theCommissioncouldaddresswhethertheapplicantshavefulfilledcommitmentsmadetostateandlocalcommunitiesinpriormergers.0    a.  Forexample,in1996,PacificTelesisGroup( Pacific)andSBCCommunications,Inc. '#& ( SBC)proposedtomerge.TheCaliforniaPublicUtilitiesCommission( CPUC)approvedthemergeronthreeconditions.First,itrequiredPacifictorefundtoratepayers,theshorttermandlongtermeconomicbenefitsofthemerger.Oftheapproximately$248millionrequiredtobepassedontoratepayers,theCPUCordered$213milliontobedistributedtoratepayersinthe h+&* formofbillingsurcreditsoverafiveyearperiod.Second,itrequiredPacifictoimplementtheCommunityPartnershipCommitment( CPC).TheCPCspledgesincluded:1)extendingaccesstoadvancedtelecommunicationsservicestoabroadspectrumofCalifornians;2)establishingaresearchcenterincooperationwithauniversitytoinvestigatewaystoadvanceconsumerinterests;3)supportingauniversalservicetaskforcetoincreasepenetrationlevelsto98%.Third,itrequiredPacifictocomplywithprovisionsofGeneralOrder133B,whichgovernscustomerservicequality.Theseprovisionsincluderequirementsforbusinessofficeansweringtimeandtroublereportansweringtime. (#(# 0        Currently,SBCisproposingtomergewithAmeritechCorp.Inreviewingthisproposedmerger,theCommissioncouldaddresswhethercommitmentsmadetoCaliforniansintheSBC/Pacificmergerhavebeenmet. (#(# 0    \0XX #X X\0!#3X XXX b.  Thisprincipleappliesequallytoothermergers._GTE_u+ 4 <DL!X` P hhXhpXuCorporation("_GTE_")isproposing   tomergewithBellAtlanticCorporation("BellAtlantic").Inreviewingthisproposedmerger,theCommissioncouldaddresswhetherBellAtlantichasfulfilledcommitmentsmadetocommunitiesintheBellAtlantic/NYNEXmerger.#X XX3X "# (#(# 5.  Asaconditionofapproval,theCommissionshouldrequirethattheapplicantsbesubjecttoan H enforcementmechanismthatsetsupasystemofmeasurablestandardsandbenchmarkstoevaluatewhethertheapplicantshavefulfilledtheircommitmentstoconsumersandstateandlocalcommunities.6.  Themergershouldpreserveoradvancetheprovisionofuniversalservicetostateandlocal 4 communities.7.  Themergershouldequitablyallocatethetotalbenefitsbetweenalloftheaffectedstateandlocal  communities.Nosinglecommunityshouldreceivethemajorityofthebenefits.0    a.  Forexample,asindividualstatesandlocalcommunitiesreachsettlementagreements l withpartiesproposingmergers,itiscriticalthatallbenefitsbedistributedequitablythroughoutthecommunitiesaffectedbytheproposedmergers.Somestateandlocalgovernmentsarefaralonginimplementingderegulationandcompetition,whileothershavenotyetstarted.Itmaybethecasethatthosestateandlocalcommunitieswhohavenotyetimplementedderegulationandcompetitionmayhavemoreleveragewiththemergerpartiesbecausetheymayhavemoretooffer.Thus,mergeragreementsmayresultinadivisionbetweencommunitiesthatgainmajorbenefits,andothersthatdonot.Tomeetthepublicintereststandard,aproposedmergershouldbeevaluatedbytheentirearrayofsettlementsandbenefitsoffered,withafocusonequitabledistributionofthebenefitsnationwide. (#(# 8.  Themergershouldequitablyallocatethetotalbenefitsbetweentheshareholdersandratepayers. )$(  h+&* 0    a.  Forexample,ratepayerbenefitshavebeenconsideredinBellAtlantic/NYNEXmerger  petitionbeforetheMainePublicUtilitiesCommission( MPUC).In1996,BellAtlanticpetitionedtomergewithNYNEX,andBellAtlantichaspresentlypetitionedtomergewithGTE.Inthe1996merger,theMPUCacknowledgedthe efficiencygainsoftheBellAtlantic/NYNEXmerger,andfounditnecessarytoensurethatcustomersrealizethesebenefits.TheMPUCfoundthatnetcostsavingswouldoccur,andreservedtherighttoimputethesavingstotheratepayers,iftheydidnotmaterializeafterthefirsttwotothreeyearsofupfrontmergercosts.TheMPUCisscheduledtoreviewthestatusofratepayerpassthroughsavingsin2000. (#(# 0        TheMPUCalsoconsideredratereductiontoreflecttheincreasedvalueofstockfromamerger.Ratepayersareentitledtothebenefitofanygain(proceedslessnetbookvalue)onthesaleofanasset,whentheratepayerhasbornetheriskoflossofautilityasset.IntheBellAtlantic/NYNEXmerger,theMPUCrejectedthisproposedratereductionbecauseitfoundthatthemergerwasstrictlyastocktransfer.However,intheproposedBellAtlantic/GTEmerger,consumeradvocateshavesuggestedthatratereductionisappropriatebecauseofthereorganizationandproposeduseofutilityassetsfornonutilitybusiness. (#(# 9.  Intheeraoffastpacedtechnologicaladvancementandconvergence,themergershouldadvance \ theutilizationofalltechnologiesandtheirequitabledeployment.AdoptedbytheLSGAConthis____dayof_______,June,1999.         `  P          h  X    (     X2XXX2___________________________ 4          `  P       0  0h(#(#0Xh(#h(#0X(#X(#0((#(#0((#((#0(#(#KennethS.Fellman (#(#          `  P          h  X    (     Chairman#X2XXX2J1#