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Deal Will Test Antitrust Rules, but Experts Expect It to Fly


WASHINGTON — The consolidation of the cable TV industry that would result from the AT&T-MediaOne Group deal will test the federal government's antitrust rules that limit cable ownership.

The deal raises a host of complex regulatory issues, including whether cable companies should have to open their networks to all comers like phone carriers do, and whether AT&T would be required to reduce ownership interests in everything from wireless phones to cable programming.

Nevertheless, despite criticism from some consumer groups, Internet access providers and cable TV equipment suppliers, experts say the merger is likely to be approved by regulators.

In reviews expected to last six months or more, the Justice Department is expected to examine whether AT&T's acquisition of MediaOne is anti-competitive under federal antitrust laws, while the Federal Communications Commission will determine whether the deal is in the public interest.

Sens. Mike DeWine (R-Ohio) and Herbert Kohl (D-Wis.) announced Wednesday that they will hold hearings on the merger.

"We need to closely examine all competitive aspects of this proposal to ensure competition is preserved and consumers are protected," they said in a statement.

"This merger is an abomination and we intend to fight it like heck," said Mark Cooper, research director in Washington for Consumers Union.

Federal antitrust guidelines already characterize the cable industry as moderately concentrated, and the purchase of MediaOne is likely to run afoul of those guidelines, which have been used to block other mergers and acquisitions in cable and other industries.

What's more, AT&T's acquisition of MediaOne would test the limits of an obscure FCC rule that caps the nationwide reach of a single cable owner at 30% of U.S. households.

Enforcement of the FCC's ownership rule, however, was suspended by the agency after the cable industry mounted a federal court challenge in 1993. But the FCC is considering reinstituting the rule and has asked for public comment about whether it should be modified.

Even if federal statutes and rules are enforced, experts say that AT&T Chairman C. Michael Armstrong has plenty of wiggle room to package his deal in a way that muddies the waters as far as federal law is concerned. At worst, they say, regulators might impose some requirements on AT&T that it jettison cable outlets in markets that overlap with MediaOne.

"The antitrust guidelines are fairly consistently applied, but the problem comes in their interpretation: One group of lawyers may look at the [ownership] facts differently than another group," said Donald I. Baker, a prominent Washington antitrust lawyer who headed the Justice Department's antitrust division during the Ford administration.

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