Last week, the New York Public Service Commission staff released a report hinting at conditions on the Verizon acquisition of MCI. The report was a reminder that regulatory reviews of the mergers of SBC-AT&T and Verizon-MCI are far from complete.

The mergers were announced nearly six months ago. Despite the passage of time, it still is difficult to predict how and when governmental review will conclude. Meanwhile, investors, employees, customers, suppliers, and competitors wait in limbo. Simple approvals rather than governmental conditions, delays, and even threats of court challenges mean the difference between clever acquisitions and corporate albatrosses.

Although the SBC-AT&T merger was formalized a few months before the Verizon deal, regulators are likely to look at both mergers in tandem. Administratively, it is less costly for regulators to examine the two mergers at once. Conceptually, any regulatory or antitrust concerns are more realistically examined through consideration of both mergers.

There are not one but many regulatory reviews. State regulatory commissions examine the mergers for their effects on state markets. SBC is further along than Verizon in the state reviews of its merger. Similarly, a few state attorneys general have the authority, if not the interest, to review the mergers.

The N.Y. commission report called for conditions on the Verizon merger with MCI. The staff report may not reflect the views of any, much less a majority, of New York commissioners, but it is unlikely to have been released without the tacit approval of Chairman William Flynn.

Ultimately, the most serious challenges the mergers face will be at the federal level, where the Antitrust Division of the Department of Justice and the Federal Communications Commission are reviewing the mergers. The Antitrust Division will focus on potential anticompetitive results from the proposed merger in local and national markets.

As with all reviews, some of the key issues are the definitions of markets for the services offered and sold by the merging parties. Both SBC and AT&T on the one hand, and Verizon and MCI on the other, compete with each other in some markets, and the Justice Department will examine whether the merger will lead to an unwarranted expansion of market power in those markets.

It is impossible to determine from the outside how the Justice Department will define the markets for the merging parties, which compete in some retail markets, such as residential local and long-distance services, as well as residential broadband services. They also compete on similar services for business customers, as well as on wholesale services sold or leased to other telecommunications companies. These wholesale services include nationwide networks, local exchange services, and long-distance services.

The Justice Department could impose conditions on the mergers, but it would have to be part of a credible threat to take one or both merging parties to court. Potentially complicating matters, the assistant attorney general for antitrust has yet to be confirmed by the Senate, and major merger reviews attract congressional attention. Over the past decade, the Department of Justice has blocked or showed signs it would block two major telecom mergers, WorldCom-Sprint and EchoStar-DirecTV.

The FCC is also reviewing the proposed mergers. Final decisions may not be reached until two new commissioners join the FCC, but nominations for the positions have yet to even been made.

The structures of the SBC-AT&T and Verizon-MCI mergers were announced months ago. Whether they will ultimately be viewed favorably by shareholders depends on how the mergers are viewed by governmental agencies over the next few months. It is too early to tell what and when they will decide.

A former FCC commissioner, Mr. Furchtgott-Roth is president of Furchtgott-Roth Economic Enterprises. He can be reached at hfr@furchtgott-roth.com.