FCC OKs Massive Phone Merger

Federal regulators gave their blessing Friday to the merger of Bell Atlantic and GTE Corp., a union that transforms one of the offspring of the old Bell system into the nation's largest local phone company and wireless provider.

The approval allows the companies to complete a deal announced almost two years ago and launch a combined business under the new name Verizon Communications. It also brings them closer to their vision of offering a bundle of telecommunications services—local, long-distance, wireless and data from one source.

The Federal Communications Commission signed off on the deal after accepting a plan by the companies to partially spin off GTE's long-distance assets in areas where Bell Atlantic by law cannot yet offer that service. The Justice Department cleared the deal in the fall, so FCC approval is the final hurdle.

Regulators were pleased by the companies' promises to spend $500 million to enter local phone markets or serve 250,000 new customers outside of their current territories. That would make Verizon a rival to other Bell companies in some regions, offering consumers another option for local telephone services or Internet connections.

The agency accepted a plan by the companies to spin off most of GTE's Internet backbone—the massive data pipelines that crisscross the country carrying computer traffic. For regulatory purposes, this constitutes long-distance service, which Bell companies cannot offer within their regions until they show their local markets are open to competition and gain FCC approval.

Bell Atlantic secured FCC permission in December to offer long-distance service in New York state only, but it still needs to get authority to provide long-distance service for each of the remaining 12 states in its local calling region. The companies hope to have such approval in hand by fall of next year.