This Press Statement: Text | Word97
10/8/99 Separate Statement: Text | Word97

October 6, 1999


Re: Memorandum Opinion and Order, Applications of Ameritech Corp., Transferor, and SBC Communications Inc., Transferee, For Consent to Transfer Control of Corporations Holding Commission Licenses and Lines Pursuant to Section 214 and Section 310(d) of the Communications Act and Parts 5, 22, 24, 25, 63, 90, 95, and 101 of the Commission's Rules (CC Docket No. 98-141)

Although I support approval of this merger between SBC and Ameritech, I respectfully disagree with the manner in which the draft weighs the transaction's potential harms and benefits. Moreover, I find fault with the underlying public interest standard described in this Order and the approach of rounding up "voluntary" conditions (that have little connection to the identified harms) as a means of tipping the scales in favor of approval.

I concur in the conclusion that there are public harms that might well result from this combination that are not off-set by the applicant's asserted benefits. I am unsatisfied, however, that any one of them bears the weight assigned to it in this Order. Among other things, I think the Order overstates the degree to which the merger sharpens the incentives and increases the ability of the applicants to discriminate, avoid opening their markets or otherwise coordinate their behavior to the detriment of the public. Moreover, I am unpersuaded that regulatory "benchmarking" has been, or will be, as indispensable to our activities as the Order suggests. Nor, do I find a persuasive explanation as to why this merger breaks the benchmarking camel's back as opposed to the mergers that preceded it. In sum, given my judgment that the harms that could result from the merger have been afforded too much heft, I would have imposed fewer counter-balancing conditions and would have calibrated them to remedy the clear harms.

More broadly, consistent with my long-standing concerns regarding our license transfer process, I have fundamental concerns with the public interest standard as formulated in this Order. Simply put, I am uncomfortable with a standard that places harms on one side of a scale and then collects and places any hodgepodge of conditions -- no matter how ill-suited to remedying the identified infirmities -- on the other side of the scale. This approach leads to a number of problems: (1) the identified harms nonetheless may be visited upon the public; (2) the process of securing conditions is difficult to achieve without some negotiated consent of the applicants alone, leaving the integrity of our process vulnerable to criticism; (3) it affords too great a temptation to load up the benefits side of the scale with a big wish list of conditions non-germane to the merger's potential harms; and (4) the conditions could become surrogates for substantive rules, without the extensive deliberative process and the check of judicial review normally afforded a rulemaking.

With respect to my fourth point above, I have particular concerns that in an effort to have these conditions carry weight by making them extensive and detailed, we may actually confuse the industry and our sister authorities as to the Commission's position on the subjects covered. In this regard, I note that several new entrants have expressed a preference for approval without conditions, rather than risk the possibility that these conditions will be used to contravene prior interpretations of our rules, or prejudge decisions in future proceedings. They take this position, notwithstanding the condition's purported benefits to entrants.

Finally, I would say this. I do not doubt that the unique process employed in this review was initiated with the best intentions and with the highest regard for due process for all those involved. Although it may have come up short in some respects, I do believe it was conducted with integrity and a deep commitment to fairness. Nonetheless, I would not like to see it repeated, for many of the reasons I have sketched here and will discuss more fully in a separate statement. In particular, I do not subscribe to an essential assumption of this process, that is, the idea that a regulated entity can "voluntarily" offer and commit to broad-ranging legal obligations and penalties. There is never anything voluntary about the regulatory relationship. I do not believe that the guiding structures of the regulatory process (either rulemaking or adjudication) should be supplanted by unilateral contract.