US Federal Communications Commissioner Robert McDowell will be permitted to cast the tie-breaking vote on AT&T Inc's proposed acquisition of BellSouth Corp, the agency's general counsel said on Friday.
FCC general counsel Samuel Feder said in a memorandum released by the agency that McDowell should be allowed to weigh in on whether to approve the deal in order to break a deadlock among the other four commissioners. "You are now free to participate if you choose to do so," Feder said in the memo.
McDowell could abstain, but that is seen as unlikely by some analysts. The agency has a public meeting scheduled for December 20 and FCC Chairman Kevin Martin said a vote on the $84.5-billion deal was not likely then, but hopefully by the end of the year. McDowell originally said he would not vote on the matter because he previously worked for an association that represented competitors of the two companies. He said on Friday he was reviewing Feder's opinion.
"In the meantime, I strongly urge the participating parties and my four colleagues to resolve their differences in the same amicable and unified manner they did in the similar merger between SBC and AT&T just last year," McDowell said in a statement.
The FCC has been reviewing the proposed acquisition for more than seven months and the four other commissioners - two Republicans and two Democrats - have been trying to break a deadlock for weeks over what conditions to attach.
Martin said a week ago the negotiations had reached an impasse and sought an opinion by the general counsel on McDowell's possible participation, a rare move. The agency usually tries to reach agreement via consensus.
Since McDowell, a Republican, has sat out the deliberations, he would likely have to read the draft order to approve the deal and hold meetings with the companies and other interested parties, a process that could take weeks. "I'm hopeful we could (vote) by the end of the year," Martin said in a phone interview. "I don't think we'd be able to put it on the agenda for the 20th but I'm hopeful we could move forward soon."
In Feder's opinion, he said the head of the federal government's ethics agency told him he would not have authorised McDowell to participate. But the head of the Office of Government Ethics, Robert Cusick, also said it was a "very, very close call" on which reasonable people could disagree, according to Feder.
Feder said he reached a different conclusion because the deal has been pending before the FCC for so long and no one except McDowell could break the tie. He said the need to resolve it one way or the other outweighed "the concern that a reasonable person may question the integrity of the agency's programs and operations."
Democratic lawmakers responded to the decision by urging McDowell to abstain from the case, citing the Cusick opinion. "Commissioner McDowell should not wade into these ethically murky waters," said Rep. Edward Markey, a Massachusetts Democrat. AT&T has offered numerous concessions, including freezing some wholesale rates for competitors to gain access to its network and a low-cost basic high-speed Internet package. But the competitors have complained the offers were not enough.
The talks most recently have centered on an arbitration process to resolve disputes over rates for competitors to lease lines, as well as prioritising Internet content from providers who pay a fee, an issue known as Net neutrality.
Martin said he spoke to the two Democrats, commissioners Jonathan Adelstein and Michael Copps, this week about possibly breaking the impasse and "told them my preference was still to work out a compromise."
Representatives for Copps and Adelstein were not immediately available for comment. AT&T and BellSouth said in a December 7 letter that they would have no problem with McDowell voting on their combination. An AT&T spokesman declined to comment further.