The Democratic regulators at the FCC are seeking to condition two pending telecommunications mergers with safeguards to protect small businesses and consumers, sources familiar with the negotiations said.

One source said the Democrats — Jonathan Adelstein and Michael Copps — also might seek the divestiture of overlapping facilities that would result from combining AT&T with SBC Communications and MCI with Verizon Communications. But the FCC will not make a final decision on divestitures until the Justice Department, which has primary authority in the area, issues its expected approval of the deals.

Negotiations were ongoing, with one observer emphasizing that the "horse trading" would "go down to the wire." Due to a vacancy on the five-member commission, the agency is evenly split along party lines. Additional appointments would give the Republicans a 3-2 majority. Sources indicated that the Democrats, recognizing they have maximum leverage now, would strive for an agreement.

The FCC had hoped to make an announcement at its meeting this Friday — but anticipated agency approval of the mergers could slip, possibly to a Nov. 3 meeting. Further complicating the situation, FCC Chairman Kevin Martin and his wife are expecting a baby soon, and Thomas Barnett, head of Justice's antitrust unit, is in Europe until Friday.

Details were murky on the conditions the Democrats will seek, but according to sources, a top priority is protecting business customers, who could face higher prices when the four companies consolidate into two. Some local competitors of the dominant Bell firms are seeking price reductions on wholesale access rates for three to five years, among other restrictions.

The Democrats might seek to force the merged companies to offer high-speed Internet sold separately from phone service. They also may try to impose "network neutrality," a prohibition on blocking or degrading competing services.

Democrats are concerned about peering, the exchange of Internet traffic among telecom providers. The concern is that the merged companies would exchange traffic without payment but charge smaller players to use their networks, sources said.

The FCC has been under intense pressure from competing telecom providers, business customers, watchdog groups and a few lawmakers to impose conditions. "We are dependent on those companies for connections to customers, and when competition for those connections is reduced, prices will go up and service quality will go down," said Steve Davis, senior vice president of public policy at Qwest Communications International.

"The concerns we had then are still our concerns," Sen. Herb Kohl, D-Wis., said during an impromptu interview on Wednesday. Kohl was referring to a letter that he and Senate Antitrust Subcommittee Chairman Mike DeWine, R-Ohio, sent the FCC and Justice on July 29. They emphasized the deals "may pose anticompetitive problems if approved without modification."

Meanwhile, the California Public Utilities Commission on Oct. 19 issued a preliminary decision approving the mergers if stand-alone broadband is required. The MCI-Verizon deal has cleared 18 states and is pending approval in 11. The AT&T-SBC deal has cleared 32 states and is pending in three.