The proposed merger, first announced in May 1998, would combine two of the nation’s largest incumbent local exchange carriers (ILECs) and the resulting entity would control approximately 38 percent of the nation’s access lines.

"While CompTel strongly endorses the FCC’s pro-consumer and pro-competitive goals in reviewing the SBC/Ameritech merger application, we must conclude that the Commission’s proposed conditions are not adequate to ensure that competitors are able to penetrate local markets. These conditions also could unintentionally create a negative impact," said H. Russell Frisby, Jr., CompTel’s president.

"In fact, many of the FCC’s proposed conditions either simply require SBC/Ameritech to obey existing law or offer competitors less than the law currently requires. Many of the conditions also violate the nondiscrimination provisions that form the foundation of the 1996 Telecommunications Act," Frisby said.

Specifically, CompTel noted that the FCC’s proposed merger conditions "include a grossly restricted offering of network element combinations" and severely limit the availability of reduced unbundled loop and resale rates – thus enabling SBC/Ameritech "to treat carriers differently and to impose use restrictions on network elements and resale that the Act and the FCC have specifically forbidden."

CompTel also warned that the FCC’s proposed separate affiliate structure for the provision of advanced services provides no pro-competitive benefits. "It permits joint marketing by the ILEC entity and the advanced services affiliate; allows SBC/Ameritech to provide operations, installation and maintenance services to the affiliate; and allows intermingling of equipment, customers, brand names, services, employees and resources between SBC/Ameritech and its affiliate," the association stated. CompTel urged the FCC to prohibit any SBC/Ameritech affiliate from reselling any services of the ILEC entity.

Furthermore, the conditions could be interpreted to confer non-ILEC status on the advanced services affiliate – thereby exempting the affiliate from compliance with the market-opening provisions of Section 251(c) of the Act – a conclusion which is legally incorrect and would allow ILECs to evade their local competition obligations by letting them set up nominally separate affiliates for their local activities.

CompTel offered several suggestions for strengthening the FCC’s conditions on the proposed SBC/Ameritech merger, including:

• Elimination of restrictions on availability of the combined network element offering (the so-called "platform," or "UNE-P"), including customer class, service and time restrictions;
• Elimination of limitations on services provided pursuant to discounted loop rates for voice-grade as well as advanced services, and elimination of customer class restrictions on service resale discounts;
• Barring SBC/Ameritech from packaging its incumbent local exchange services with other competitive services, including out-of-region local services; and
• Requiring SBC/Ameritech to wait to offer any digital subscriber line (DSL) line-sharing option to its affiliate until it can offer the option on a commercial scale to unaffiliated local competitors.

CompTel also asked the FCC to clarify that the conditions on the proposed merger would not be relevant to, nor do they prejudge, any actions by the FCC in other rulemakings, such as the proceedings on network elements, DSL line-sharing, advanced services separate affiliates, CompTel’s petition for a declaratory ruling on Section 251(h), or any Section 271 petitions.