The commission's 3-1 vote Wednesday marked one of the final steps toward completing the $29.2 billion merger, which comes amid a wave of consolidation in the cable business.
The FCC dismissed consumer groups' concerns about potential dominance by the new AT&T Comcast, which would control 29 percent of the market with 27 million subscribers, nearly twice as many as No. 2 AOL Time Warner Inc.
"The benefits of this transaction are considerable, the potential harms negligible," FCC Chairman Michael Powell said.
Following the FCC announcement, the Justice Department's antitrust division said it wouldn't challenge the merger.
Gene Kimmelman, the lead lobbyist in Washington for Consumers Union, which publishes Consumer Reports magazine, called the merger "dangerous."
"It is mind-boggling how federal officials have let the largest cable companies consolidate and thereby dictate the choices of cable channels and high-speed Internet services for consumers," he said.
But FCC media bureau chief Kenneth Ferree said no consumer would see a drop in the number of pay TV choices available.
Company arguments that the merger would help consumers prevailed, said Jeff Kagan, an independent telecommunications analyst in Atlanta.
"This was a big win for them; they focused on the benefits like the rapid rollout of broadband and advanced services," Kagan said. "The FCC clearly thought the good outweighed any bad, so much so they only mentioned the good and didn't mention anything negative."
FCC Commissioner Michael Copps, the panel's only Democrat, opposed the merger.
"The sheer economic power created by this mega-combination and the opportunities for abuse that would accompany it outweigh the very limited public interest benefits," he said.
Comcast officials have said they expect the merger to take place this month, but didn't elaborate on the timing.
The FCC said its decision was contingent on the combined company selling its 25 percent stake in Time Warner Entertainment. The companies must place their ownership of TWE into a trust when the merger closes and sell it off within five-and-a-half years.
The deal, proposed in December, was originally valued at $47 billion in stock plus assumption of about $25 billion in debt. It has declined in value by about 35 percent as Comcast shares have fallen along with the rest of the market over the past year.
The companies announced last month that as operations are merged, 1,700 jobs identified as redundant will be cut at AT&T Broadband's headquarters in Englewood, Colo. AT&T Broadband has about 40,000 employees. Comcast Corp. has about 38,000, including 20,000 in its cable division.
Philadelphia businessman Ralph Roberts bought a 1,200-subscriber cable system in Tupelo, Miss., in 1963. He changed the name to Comcast in 1969, and took the company public in 1972.
Brian Roberts became president and a director in 1990. He accelerated the company's expansion, building Comcast into the No. 3 cable operator by 2001.
Comcast closed down 70 cents Wednesday at $23.30 on the Nasdaq Stock Market. AT&T closed down 39 cents at $13.47 on the New York Stock Exchange.
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