FCC mulls AT&T divest order


FCC commissioners are trying to decide whether AT&T should be ordered to sell its interest in Time Warner's cable systems despite a court's decision striking down limits on one company's share of pay-TV subscribers.

At the prodding of Consumers Union and other public advocacy groups, the FCC yesterday asked for public comment on how the court's ruling affects AT&T's pledge to sell cable investments as a condition of government approval for acquiring MediaOne Group last June.

Comments are due May 11; replies May 25. Following the March decision, the FCC suspended AT&T's May 19 divestiture deadline. Consumer Union said the divestiture order was based on the FCC's authority to act in the public interest as not simply the cable ownership limits. "The required divestiture was not undermined or invalidated by the decision" of the court, Consumers Union told the FCC.

Although the FCC gave AT&T three divestiture options, Consumers Union has argued repeatedly that a 25% stake Time Warner Entertainment should specifically have been ordered. The group argues that the industry landscape has changed dramatically since the AT&T/MediaOne deal was approved, increasing the potential for damaging competition in the media business and nearly eliminating the benefits AT&T predicted consumers would receive. For starters, the merger of America Online and Time Warner into the country's largest media group was approved in January, creating a quasi-monopoly on broadband services because of the link between AT&T, the largest cable operator, and AOL Time Warner, the group says.

Furthermore, Consumers Union notes that AT&T's new plan to split its long distance phone business from the cable and broadband operation belies the major purported public benefit of the MediaOne merger: that greater efficiencies will speed the rollout of local phone service. - Bill McConnell