Saturday, December 30, 2006

AT&T buys BellSouth; Net Neutrality Conditions

AT&T will be our new telecom overlords.

AT&T's (nee SBC) purchase of BellSouth was made certain yesterday when the FCC's Democratic commissioners forced Net Neutrality, wireless data competition, and other conditions on AT&T in exchange for allowing its combination to go through.

Expect a new name on your phone bills. (And a new funder for anti-Lafayette lawsuits--AT&T/SBC has, if anything, a worse history than BellSouth in regard to such legal tactics.) The name of our new phone overlords is the biggest news for Lafayette in the event. For the rest of the country the news is quite different. Says Columbia's Tim Wu on the website says:
To the lay reader the AT&T merger agreement may appear highly technical. It is, however, a milestone, and may even be remembered as an important moment in Internet history. Most notable is the agreement's striking inclusion of the first strong Network Neutrality language yet seen in any broadband regulatory device.
As hopeful as that is it should be noted that this Net Neutrality requirement is mainly establishes a precedent. Congress will have to act if the internet is to be protected from the sorts packet prioritizing charges that the CEO of AT&T has promised.

Yesterday's conditional approval by the FCC was the last step in what had once looked like a completely unconditional approval by Federal authorities. Most disconcerting to many was the unconditional approval by the Justice Department--charged with enforcing anti-trust laws--of a merger that will make AT&T the largest telecom company by far. The LATimes reports that:
AT&T would end up managing more than a third of the nation's land lines and dominating local service in California and 21 other states. It would hold 23% of the broadband Internet market, leave nearly 95% of the offices in major cities without real choice in service and run the nation's largest cellular carrier, Cingular Wireless.
AT&T's political might already is unrivaled in its sphere. In the last eight years, it has contributed more to federal politicians and spent more on lobbying than the entire cable and satellite TV industries combined — and more than any communications, media or technology company, according to the Center for Public Integrity.
It's no surprise, then, that AT&T generally gets what it wants. What made a difference this time was a combination of last November's sweep of Congress by the Democrats and a conflict of interest by the deciding Republican member of the FCC that resulted in his not casting a vote. Deadlocked for months while the FCC chair, Martin, maneuvered to allow the Republican with the conflict of interest a special dispensation to vote. When he was finally allowed to do so he decided that--allowed or no--he'd be better off not voting. That decision was no doubt influenced by blunt language from incoming Congressional leaders to the effect that he really shouldn't be looking for, or accepting, a special dispensation. When he finally refused outright to vote on this matter AT&T moved quickly to accept the compromise we see today.

They're several more conditions beyond the net neutrality question. The FCC also imposed temporary pricing controls on inexpensive DSL and on the sorts of lines AT&T's competitors use for backhaul.

Also significant for people in the BellSouth footprint was the requirement that BellSouth divest itself of all, all, of its 2.5 gig spectrum. That might turn out to be more important than it appears on the surface as it will mean that around here the new AT&T won't own that significant chunk of the wireless spectrum. That divestiture is the most secure and permanent promotion of competition in the order.

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