FCC OKs AT&T Merger w/ BellSouth

To the dismay of the FCC chair, some conditions on (*gasp*) “net neutrality” were part of the concessions (see below): FCC clears AT&T mergerpdf (WaPo’s AT& T Completes BellSouth Takeoverpdf)

The $86-billion deal gives San Antonio-based AT&T a third of the nation’s land lines, dominating local phone service in California and 21 other states. AT&T also becomes the nation’s largest provider of high-speed Internet access and gains full control of Cingular Wireless, the country’s biggest cellphone company, which was 40% owned by Atlanta-based BellSouth.

[…] Although the Justice Department unconditionally approved the deal in October, unusual circumstances gave the two Democrats on the Republican-controlled Federal Communications Commission leverage to hold up final regulatory approval until AT&T made the concessions. Desperate to close the deal by the end of the year, AT&T caved in to the commissioners’ demands late Thursday.

[…] AT&T’s most significant concessions were to provide high-speed Internet access to customers for $19.95 a month without requiring them to purchase phone or other services; to lower and freeze for four years the fees it charges other phone companies to use its lines; to sell some of its wireless spectrum to promote competition for high-speed Internet access; and to treat all Internet content equally as it travels over its lines.

Those conditions came on top of earlier AT&T pledges to offer broadband service for $10 a month to customers with AT&T phone service, give free high-speed modems to customers now using dial-up service and to install at least 30% of its new broadband lines in rural and low-income areas.

Natalie Billingsley, a supervisor with the California Public Utilities Commission’s Division of Ratepayer Advocates, which advocates for consumer interests, said the new concessions improved the outlook for AT&T and BellSouth customers. But she said consumers would have been better off if the merger had not been approved and expressed skepticism that customer service would improve.

FCC announcement and statements: Martin & Tate; Copps; Adelstein; McDowell. From Copps’ statement (pp. 3-4)

The condition builds upon the four principles of net neutrality unanimously

adopted by this Commission and made enforceable in the context of the Bell mergers completed last year. In addition to the company’s compliance with these four principles, the condition agreed to by the merged entity includes a fifth principle that requires the company to maintain a “neutral network and neutral routing” of internet traffic between the customer’s home or office and the Internet peering point where traffic hits the Internet backbone. The company is prohibited from privileging, degrading, or prioritizing any packets along this route regardless of their source, ownership, or destination. This obligation is enforceable at the FCC and is effective for two years. It ensures that all Internet users have the ability to reach the merged entities’ millions of Internet users—without seeking the company’s permission or paying it a toll. The next Drudge Report, Wikipedia, Craigslist, Instapundit, or Daily Kos should not have to seek a massive corporation’s blessing before it can begin reaching out to the American public, and we can take considerable comfort from the fact that today’s condition prohibits such behavior. While I might have preferred a longer duration, prior mergers resulted in similar time periods for the net neutrality conditions and it is in my view sufficient to allow Congress to take longer-term network neutrality action if it chooses to do so.

Relatedly and importantly, the merged entity is required to continue to maintain the present number of Internet backbone peering relationships for the next three years. Thus the status quo in the Internet backbone market is preserved by preventing the merged entity from using its larger size and immense last-mile customer base to terminate the settlement-free peering relationships that are fundamental to the Internet as we know it. Read in conjunction with the network neutrality obligation, this peering provision will help to protect the Internet experience and the powerful opportunities it promises for the future.

The associated Slashdot discussion (citing a TechDirt piece) is less sanguine, citing loopholes galore: AT&T Offering Merger Concessions