This News Release: Text | Word97
Attachment: Requirements of FCC's Conditioned Approval of the AT&T-MediaOne Merger
Statements: Kennard | Kennard Press Statement | Furchtgott-Roth | Powell | Tristani
Order: FCC 00-202: Text | Word97 | Acrobat

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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 5, 2000
Michelle Russo (202) 418-2358
David Fiske (202) 418-0513


FOR IMMEDIATE RELEASE: News Media Contacts: Washington, D.C. – The Federal Communications Commission (FCC) today gave a conditioned approval to the transfer of control of licenses and authorizations from MediaOne Group, Inc. (MediaOne) to AT&T Corporation (AT&T).

In a Memorandum Opinion and Order adopted today, the FCC ordered AT&T within six months of completion of the merger to inform the Commission what interests it will divest to come into compliance with the FCC’s horizontal ownership rule. This rule prohibits a single cable company from serving more than 30 percent of the nation’s multichannel video programming distribution (MVPD) subscribers, who are served primarily by cable television and direct broadcast satellite services. The FCC concluded that the merged firm without divestitures would have served 41.8% of the nation’s MVPD subscribers.

The elected divestiture must be completed by May 19, 2001, which is one year from the date the U.S. Court of Appeals for the D.C. Circuit upheld the constitutionality of the statute authorizing the FCC 30% subscriber limit. The FCC ordered AT&T to report to the FCC by March 19, 2001, as to whether it will meet the May 19 divestiture deadline. If it does not meet the deadline, AT&T must designate the assets that must be placed in an irrevocable trust for the purpose of sale to complete the elected divestiture option. The FCC said the conditions being imposed are “non-severable.”

AT&T can select one of three divestiture alternatives to reduce their MVPD national subscribership to 30%: (a) divest MediaOne’s 25.5% interest in Time Warner Entertainment, LP (TWE); (b) insulate its ownership interest in TWE by ending involvement in TWE’s video programming activities, which entails selling AT&T’s programming interests, including Liberty Media Group; or (c) divest ownership interests in other cable systems serving 11.8% of MVPD subscribers nationwide or more than 9.7 million subscribers.

The FCC said that its policy of strict enforcement of the 30% MVPD subscriber cap is designed to ensure that no one company can act as a gatekeeper over the flow of video programming to consumers or undermine the statutory goals of protecting diversity and competition in the video programming business.

The FCC also said that during the period prior to compliance with the required conditions, the merged firm must comply with interim conditions that are designed to mitigate the potential harm to the diversity of programming and competition during the compliance period. The interim conditions listed in Appendix B of the FCC’s order, which incorporate strict enforcement mechanisms, will limit AT&T’s involvement in the video programming activities of TWE and the programming networks in which the merged firm has ownership interests, including Liberty Media Group and Rainbow.

The FCC found that the combination of AT&T and MediaOne’s cable and telephony assets and experience will help to increase local telephony and Internet access competition through the cable systems. The FCC noted that local telephony competition is an important goal of the Telecommunications Act of 1996, and it concluded that the merger would enable AT&T and MediaOne to compete in providing these new services more successfully than either company could independently or through joint ventures. In 1996, competitors to the incumbent phone companies had one percent of the local market. In the second quarter of 1999, competitors reached six percent of the market.

In the broadband area, the FCC noted that it expects AT&T to fulfill its voluntary commitments to give unaffiliated Internet service providers (ISPs) access to its cable systems to provide broadband services to consumers. The FCC also noted that AT&T has entered a proposed consent decree with the U.S. Department of Justice, which requires the merged firm to divest its interest in the cable broadband ISP Road Runner and to obtain Justice Department approval prior to entering certain types of broadband arrangements with Time Warner and America Online. Given the nascency of broadband Internet services and growing competition from alternative broadband access providers, the FCC declined to impose additional conditions in this regard. The FCC emphasized, however, that it will scrutinize broadband developments closely and will review its policies if competition fails to grow as expected, especially if the merged firm fails to fulfill its commitment to open its cable systems or otherwise threatens the openness and diversity of the Internet.

Action by the Commission, June 5, 2000 by Memorandum Opinion and Order (FCC 00-202). Chairman Kennard, Commissioners Ness and Tristani. Commissioner Furchtgott-Roth concurring in part, dissenting in part, Commissioner Powell concurring. Chairman Kennard, Commissioners Furchtgott-Roth, Powell and Tristani issuing separate statements.

CS Docket No.: 99-251


Cable Services Bureau contacts: William Johnson, Quyen Truong at 202-418-7200

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Requirements of FCC's Conditioned Approval of the AT&T-MediaOne Merger