WASHINGTON — There’s static on the line.
Now that the Federal Communications Commission has revealed that it is reluctant to relax its ownership caps for cable companies, AT&T — which is busy trying to swallow MediaOne — is asking the agency to delay a vote on the issue until October.
The FCC had expected to vote on the issue at its Sept. 15 meeting, but agency sources said the decision will be put off until at least October under pressure from AT&T lobbyists. The request for a delay is an indication that AT&T’s merger with MediaOne is facing tough scrutiny from regulators and calls into question whether the telco will be able to push the deal through the agency.
Public documents on file at the FCC show that the telephone giant’s general counsel discussed the time of the vote with the agency’s top cable regulator Deborah Lathen.
AT&T’s primary lobbyist, James Cicconi, made the request just as it became clear the agency’s staffers were not going to recommend that the commission loosen its ownership rules — a change that AT&T needs to consummate its merger with MediaOne. AT&T has also asked each of the FCC’s five commissioners to delay the vote, sources confirmed.
AT&T wants the FCC to relax its current cap limiting companies to cable systems which pass no more than 30% of the nation’s households that have the ability to subscribe to cable. (Although 95 million homes can subscribe to cable, some rural areas are still not wired.)
In addition, the telco/cable giant wants the FCC to loosen its rules for attributing stakes in other companies toward the ownership cap. Under current rules, if AT&T owns as little as 5% in another cabler, all of that cabler’s property will be attributed to AT&T ownership cap.
Public interest advocates such as the Consumers Union and the Media Access Project estimate that AT&T’s recent purchase of TCI, combined with stakes in MediaOne and Cablevision Systems would leave it with an attributable stake in systems passing 57% of homes with access to cable. FCC staffers have also stated that AT&T’s proposal to merge with MediaOne would violate the ownership cap.
AT&T took some comfort in a year-old court ruling that found the FCC’s ownership caps were unconstitutional, but the agency is waging a vigorous legal defense of its rules. Many in the cable industry had expected the FCC to bolster its legal case for the rules by adjusting them, but that appears now not to be the case. Instead of relaxing the rules to make them more palatable to the courts and AT&T, the FCC is standing its ground.
Nonetheless, sources said Monday that they expect commissioner Michael Powell to ask FCC chairman Bill Kennard to pull the ownership cap item from next month’s commission meeting. Although Kennard could proceed against Powell’s wishes, the chairman traditionally delays votes at the request of a commissioner.
In other bad news for AT&T, it revealed in filings with the Securities and Exchange Commission that Time Warner could force the telco giant to delay its merger with MediaOne until next August. MediaOne currently owns a 25% stake in Time Warner Entertainment. Part of MediaOne’s agreement with Time Warner gives TW the right to block any merger for one year after MediaOne gives up its management rights in TWE. MediaOne did not agree to give up those rights until Aug. 3.