December 2006

TELECOM
FCC Approves AT&T-BellSouth Deal
* FCC Documents, Commentary
=09

TELECOM

FCC APPROVES AT&T-BELL SOUTH DEAL
[SOURCE: Wall Street Journal, AUTHOR: Amol Sharma=20
amol.sharma( at )wsj.com and Corey Boles]
The Federal Communications Commission approved=20
AT&T Inc.'s $85 billion takeover of BellSouth=20
Corp. Friday, after the telecom giant offered a=20
series of major concessions to consumer groups=20
and regulators. The agency approved the deal, the=20
largest ever in U.S. telecommunications history,=20
by a unanimous 4-0 vote. The merger creates a=20
behemoth that will have a market capitalization=20
of over $220 billion -- more than double that of=20
nearest rival Verizon Communications Inc. -- and=20
will serve over 70 million local phone customers=20
in 22 states, as well as 10 million broadband=20
users. Approval of the deal was never in serious=20
doubt, but it was held up for months because of=20
objections from consumer groups and Democrats.=20
AT&T broke the logjam by proposing a series of=20
conditions this week that won over the Democrats,=20
including a pledge not to prioritize any Internet=20
content provider's traffic over another's, a=20
principle known as "net neutrality." Lawmakers,=20
consumer activists and some Internet companies=20
said that without such regulation, AT&T would be=20
able to strike deals guaranteeing Internet=20
companies like Google Inc. higher quality or=20
faster transmissions than other providers. The=20
net neutrality condition applies to the portion=20
of AT&T's network that connects consumers' homes=20
to the Internet backbone. Special data and voice=20
networks used by corporate customers would not be=20
subject to the rules and AT&T's own nascent video=20
offerings would also be exempted. AT&T also=20
agreed to lower rates for some high-volume voice=20
and data lines that serve corporate customers and=20
are leased on a wholesale basis to smaller=20
telecom carriers. And it pledged to offer=20
stand-alone high-speed Internet access for up to=20
$20 a month. Companies that offer Internet phone=20
service, like Vonage Holdings Corp., would stand=20
to gain if consumers don't have to buy their=20
phone service and Internet service in a packaged bundle.
http://online.wsj.com/article/SB116740994686562601.html?mod=3Ddjemalert
(requires subscription)
* FCC approves AT&T's buyout of BellSouth
http://www.usatoday.com/money/industries/telecom/2006-12-28-att-bellsout...
.htm

FCC Documents

* FCC Approves Merger of AT&T Inc. and BellSouth Corp.
News Release: http://www.fcc.gov/ATT-BellSouth_Press_Release.pdf
* AT&T Files Additional Proposed Merger Commitments
http://www.fcc.gov/ATT_FINALMergerCommitments12-28.pdf

* Chairman Martin and Commissioner Tate: "[W]hile=20
the Democrat Commissioners may have extracted=20
concessions from AT&T, they in no way bind future=20
Commission action. Specifically, a minority of=20
Commissioners cannot alter Commission precedent=20
or bind future Commission decisions, policies,=20
actions, or rules. Thus, to the extent that=20
AT&T has, as a business matter, determined to=20
take certain actions, they are allowed to do=20
so. There are certain conditions, however, that=20
are not self-effectuating or cannot be=20
accomplished by AT&T alone. To the extent=20
Commission action is required to effectuate these=20
conditions as a policy going forward, we=20
specifically do not support those aspects of the=20
conditions and will oppose such policies going forward."
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-269275A2.doc
* Commissioner Copps: "We celebrate today not a=20
triumph for huge corporate mergers but a modest=20
victory for American consumers."
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-269275A3.doc
* Commissioner: Adelstein: "This transaction has=20
given me serious pause, but through hard work and=20
genuine compromise, we were able to achieve a=20
result that delivers major, tangible benefits to=20
consumers. A historic merger warrants historic=20
conditions. I don't pretend that we addressed=20
every possible issue presented here or that it is=20
possible, or even appropriate in this context, to=20
try to rectify years of decisions that have=20
undercut competition. Yet, drawing on the full=20
record, I have tried to counter-balance the=20
effects of this transaction by asking for=20
meaningful conditions that protect the open and=20
neutral character of the Internet, benefit=20
consumers by promoting affordable broadband=20
services, and preserve competitive choices for=20
residential and business consumers."
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-269275A4.doc

More Coverage

Ma Bell is calling again, with a big voice
[SOURCE: Los Angeles Times 12/26, AUTHOR: James S. Granelli]
More than 22 years after the federal government=20
broke up the AT&T phone monopoly, Ma Bell's=20
family is getting back together. With its=20
$84.5-billion plan to buy BellSouth Corp., AT&T=20
Inc. stands poised to reassemble much of the old=20
network that controlled how America communicated.=20
AT&T would end up managing more than a third of=20
the nation's land lines and dominating local=20
service in California and 21 other states. It=20
would hold 23% of the broadband Internet market,=20
leave nearly 95% of the offices in major cities=20
without real choice in service and run the=20
nation's largest cellular carrier, Cingular=20
Wireless. That makes consumer advocates and some=20
industry analysts ask: How big is too big? AT&T's=20
political might already is unrivaled in its=20
sphere. In the last eight years, it has=20
contributed more to federal politicians and spent=20
more on lobbying than the entire cable and=20
satellite TV industries combined =97 and more than=20
any communications, media or technology company,=20
according to the Center for Public Integrity.=20
"They wield a very significant amount of=20
political influence because of their nationwide=20
reach and their large number of employees," said=20
Washington lawyer Philip L. Verveer, who was the=20
Justice Department's first lead trial lawyer in=20
the case that broke up the Ma Bell monopoly. "And=20
because of that, they can play regulatory authorities off each other."
http://www.latimes.com/business/la-fi-att26dec26,1,1147356.story?coll=3D...
headlines-business
(requires registration)

AT&T compromise may get merger approved
[SOURCE: Associated Press, AUTHOR: John Dunbar]
AT&T has offered a new set of concessions that=20
are expected to satisfy the two Democrats on the=20
Federal Communications Commission and lead to=20
approval of the company's $85 billion buyout of=20
BellSouth. AT&T filed a letter of commitment with=20
the agency Thursday night that adds a number of=20
new conditions to the deal, including a promise=20
to observe "network neutrality" principles, an=20
offer of affordable stand-alone digital=20
subscriber line service and a promise to give up=20
some wireless spectrum. AT&T offered the=20
concessions after a little more than a week of=20
marathon negotiations with lawyers who work for=20
the two Democrats on the commission, Michael=20
Copps and Jonathan Adelstein, documents show. The=20
agreement came together 10 days after Republican=20
Commissioner Robert McDowell announced that he=20
would not vote on the deal, despite being=20
authorized to do so by the FCC's general counsel.
http://www.chron.com/disp/story.mpl/ap/business/4432046.html

Commentary

Late Holiday Gift: AT&T Agrees Not to Take Away Our Internet - Temporarily
[SOURCE: Huffington Post, AUTHOR: Jonathan Rintels]
[Commentary] Late Thursday night, with an=20
end-of-year deadline looming to get Federal=20
Communications Commission approval of its=20
takeover of BellSouth, AT&T agreed to significant=20
conditions on the deal that will keep control of=20
the public's Internet in the hands of the public,=20
and out of AT&T's clutches -- at least,=20
temporarily. Given that the US Justice Department=20
abdicated the public interest and turned a blind=20
eye to the glaring anti-competitive impacts of=20
combining AT&T and BellSouth, two of the nation's=20
largest phone companies, there was little chance=20
this merger could be stopped entirely. So AT&T's=20
cave in on Network Neutrality, its reluctant=20
agreement to provide system-wide low cost=20
stand-alone broadband access, its surrender of=20
valuable spectrum to competitors, and other=20
competition-preserving conditions - all in all,=20
this is likely the best outcome the public could=20
hope for. Yet, the Net Neutrality and other=20
conditions in this merger are not permanent, but=20
expire after, in most instances, 30 months. Thus,=20
the battle now shifts to Congress to make these=20
conditions permanent, and preserve control of the=20
Internet in the hands of the public, not the big=20
telephone and cable monopolists.
http://www.huffingtonpost.com/jonathan-rintels/late-holiday-gift-att-_b_...
61.html

AT&T Net Neutrality Condition: Win, Lose or Draw?
[SOURCE: Tales from the Sausage Factory, AUTHOR: Harold Feld]
[Commentary] Unsurprisingly, in an area as=20
complex as this, opinion has split on what the=20
merger conditions mean. Some, like Tim Karr and=20
Columbia Law Professor Tim Wu, and Matt Stoller=20
hail the conditions as an important victory.=20
Others, such as Cardozo Law Professor and ICANN=20
Director Susan Crawford, Jeff Pulver, and Dave=20
Burstein think AT&T has cleverly played us for=20
dupes by giving us conditions with loopholes that=20
render the conditions meaningless. While others,=20
like Dave Isenberg, strike a middle ground.=20
Others, pointing out that the conditions only=20
last two years. Comments that we got =93duped=94 or=20
=93sold out=94 or didn't accomplish squat irritates=20
me somewhat. The people who broke their backs=20
moving this are under no delusions about how much=20
remains to be done. Would it really encourage a=20
team that has just ground out a first down from=20
fourth and ten to get boos from the crowd because=20
they haven't won the game yet? While reasonable=20
minds can differ on whether to put this=20
ultimately in the win column, the lose column, or=20
the draw column, I hope folks will give those who=20
fought hard for what we got a due measure of=20
respect and some indulgence of their celebrating=20
the positives we did achieve. So yes, we need to=20
study the possible flaws in this definition of=20
network neutrality. We need to come storming out=20
of the gate the first week of '07 to make sure=20
every Senator and Representative knows this deal=20
is not enough and we will not rest until real=20
network neutrality protections become permanent=20
law. And we need to redouble our efforts in state=20
legislatures, where the telcos hope to advance=20
their franchise =93reform=94 agenda. But can we do it=20
in a way that doesn't piss all over our=20
accomplishments? Especially when, frankly, I=20
think we have good cause to celebrate how '06 came out.
http://www.wetmachine.com/totsf/item/682

AT&T Commits to Net Neutrality and Low-Cost Internet
[SOURCE: Free Press, Consumers Union, Consumer Federation of America]
Ben Scott, Policy Director, Free Press: "This=20
mega-merger can't be stopped, but Commissioners=20
Copps and Adelstein stood firm in the face of=20
intense pressure to ensure a fair deal for the=20
public that would protect the neutral and open=20
Internet. Making Net Neutrality a condition of=20
the largest merger in telecommunications history=20
would set an important precedent. It will be up=20
to the new Congress to craft a forward-looking=20
broadband policy that will bring the benefits of=20
the Internet to all Americans. For free speech,=20
democratic participation and economic innovation=20
to thrive online, Net Neutrality must be the law."
http://www.freepress.net/press/release.php?id=3D195
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