Merger conditions AT&T agreed to last week to gain FCC approval of AT&T抯 acquisition of BellSouth likely will force Verizon and Qwest to slash prices they charge for special access services, sources said Wed. Verizon raised a red flag on the provision in a letter to the agency as approval was being finalized Fri. Verizon warned: 揝uch a condition would be subject to serious legal challenge and likely would not be sustainable.?Verizon, previously not a presence in the merger docket, reacted to conditions proposed by AT&T and published late Thurs. on the FCC website. Chmn. Kevin Martin and Comr. Deborah Tate also raised the reciprocity issue in statements on the merger. 揟his is the problem that we cited all along when you抮e trying to negotiate industrywide proceedings in a merger docket,?an industry source said: 揫Negotiators] agreed to language that also affected parties outside of a proceeding... You get these unintended consequences.?br> nAT&T negotiators insisted on the condition, aimed at denying Verizon and Qwest an advantage at AT&T's expense, sources said. FCC Democrats wanted rate cuts and price caps for special access without the reciprocal language. In the end, both sides agreed to the condition as a compromise. 揑t is essentially an attempt to take an issue of AT&T抯 regulation and make it into an issue of [other carriers抅 regulation,?an attorney said: 揥hat they抮e suggesting is that AT&T must reduce prices of their special services, but those price reductions can only apply to price cap carriers if they offer similar type reductions on their telco side.?As a result, the source said, Verizon Wireless would be able to buy special access service from AT&T at the lower rates only if Verizon also agreed to cut its charges. 揤erizon Wireless would pay a higher rate than, for example, Sprint Nextel or T-Mobile unless Verizon was willing to lower special access rates on the telco side,?the source said.
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