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COMPANY NEWS; AT&T Completes Deal To Buy McCaw Cellular

COMPANY NEWS; AT&T Completes Deal To Buy McCaw Cellular
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September 20, 1994, Section D, Page 5Buy Reprints
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Hours after clearing the final regulatory hurdle, the AT&T Corporation completed its $12.6 billion purchase of McCaw Cellular Communications today and formally began an industry-wide race to build a national wireless-communications network.

As had been expected, the Federal Communications Commission approved the deal, which will unite the world's largest telecommunications company with the world's largest cellular-telephone operator. On balance, the agency said, those aspects of the deal that foster competition outweigh the anti-competitive aspects.

AT&T is expected to move swiftly to invest in new digital equipment and roll out new services that unite wireless services with features offered over the long-distance network. The company is also determined to expand McCaw's current reach, partly through more acquisitions and alliances and partly by bidding on new radio licenses being auctioned in December for personal-communication services.

The deal made final today, originally announced more than a year ago, has already shaken up the telecommunications industry. The regional Bell companies, fearful of AT&T's powerful brand name and the impact of the company's strong finances in the cellular arena, are worried about losing one of their most lucrative and fast-growing markets. The deal has also galvanized long-distance rivals like Sprint and MCI Communications into searching for wireless partners of their own.

Today's signing was muted, and kept well away from the center of public attention. The two companies refused to comment on their plans until Tuesday, when AT&T's chairman, Robert E. Allen, is to hold a news conference with James L. Barksdale, McCaw's president. AT&T executives noted that they had not received a copy of the F.C.C. order until midafternoon.

Still, AT&T's overall agenda has been clear for some time. The company is expected to sink more than $1 billion into equipment, upgrading McCaw's networks to a new generation of digital technology and integrating the cellular network with the computerized wizardry of its own long-distance network.

The two companies have also been working on new marketing programs, hoping to offer cellular and paging services as part of a package to business customers.

Under the terms of an antitrust consent decree signed by the Justice Department, McCaw cannot start using the AT&T brand name until after it has installed equipment that allows cellular customers to use other long-distance services.

Many analysts believe that conclusion of the deal will further deepen the fault lines between AT&T and the regional Bell companies. Now that AT&T does not have to worry that its coveted purchase of McCaw will be waylaid by legal objections, it is expected to move much more aggressively to find new ways of competing in the local telephone market.

All the long-distance carriers are searching for ways to reduce the access charges they must pay to local telephone companies to be allowed to reach the local providers' individual customers. These charges account for nearly half the cost of a long-distance call, and AT&T is eagerly looking to reduce those charges by linking through to cable television companies and alternative access carriers.

The F.C.C.'s approval today of the merger was expected, because the deal had already been blessed by the Justice Department's antitrust division and by United States District Judge Harold H. Greene, who oversees the antitrust consent decree that broke up the old Bell System 10 years ago.

In its action, the commission insisted that AT&T, which is also a major supplier of cellular-telephone equipment, refrain from discriminating against rival cellular companies. Likewise, AT&T is prohibited from discriminating against rivals in supplying proprietary network services.

AT&T had already agreed to similar restrictions earlier this summer with the Justice Department, so the new restrictions generated no objections from the company.

Nevertheless, some of the Bell companies are still attempting last-ditch legal maneuvers to stop the deal. The BellSouth Corporation, of Atlanta, immediately asked the F.C.C. for a stay of its decision and said it would appeal the ruling to the United States Court of Appeals in Washington. Two other "Baby Bells," Bell Atlantic and Nynex, had already filed a Federal suit in New York, and a judge has scheduled a hearing for Nov. 1.

No one expects the deal to unravel now. The big question will be how AT&T carries out its plan and whether it can justify the price it has agreed to pay.

A version of this article appears in print on  , Section D, Page 5 of the National edition with the headline: COMPANY NEWS; AT&T Completes Deal To Buy McCaw Cellular. Order Reprints | Today’s Paper | Subscribe

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