European Commission said today it has cleared British Telecommunications and AT&T joint venture to provide international services, after AT&T agreed to divest its UK unit ACC and set up 'a structural separation' with its 22 per cent stake in affiliate Telewest.
The clearance is also subject to AT&T's commitment to withdraw from the AT&T Unisource Communications Services (AUCS) venture, from World Partners and from Arcor in Germany, at the end of a transition period.
"The commission acknowledged that the current state of competition in international markets offered the necessary environment to enable the venture to go forward. However, three coordination concerns were identified on UK markets," the commission said.
"AT&T has offered undertakings which resolve all of these concerns. These undertakings are the divestment of ACC UK, the creation of a greater structural separation between AT&T and Telewest and the ability for another distributor...to distribute AUCS in the UK," it stated.
A commission source said the structural separation would create 'a firewall' between Telewest and the rest of AT&T, including limiting the access for AT&T's directors on the Telewest board to information on the company's activities.
Telewest is one of the three big cable operators in the UK, supplying 5.6 million homes, of which 3.9 million are exclusively cable and 1.2 million exclusively telephony, giving Telewest a 21 per cent share of the UK's 27 million households. BT is its main competitor.
The commission said competition on international markets would remain sufficient even in the global telecommunications services market, where the parties have a combined 30 to 50 per cent market share, because of present and potential competitors.
"This is a dynamic market and there are a number of competitors such as MCI Worldcom, Global One and Equant present on the market as well as a substantial number of potential competitors," it said.
On international carrier services, the venture will have a combined share of 18 per cent of international bilateral traffic in a market where there is an increasing number of competitors, "part of them due to the availability of increasing amounts of capacity at a fast decreasing cost," it said.
On the US to UK route, the parties have about half of the traffic flow in either direction but less than 20 per cent of the capacity, with plenty of additional cheap, capacity becoming available, "on this already very competitive route."
Approval of the venture includes scope for it to self correspond on the UK to US route and in the light of this the Commission is reviewing submissions from partners on lifting conditions on previous international alliances, such as on Global One.
Commission sources said conditions that could be lifted include reporting requirements on Global One partners Deutsche Telekom, France Telecom and the US's Sprint, restrictions on providing voice telephony and on bundling of Global One and partners' services.
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