FCC OK's AT&T/Bell South

With AT&T offering up network neutrality and other conditions to help smooth the way for its $85 billion merger with Bell South, the FCC Friday unanimously approved the merger, getting the deal done by the end of the year, a prospect that had dimmedafter several aborted attempts to vote the merger.

The recusal of Republican Commissioner Robert McDowell last week appeared to light a fire under the companies, which offered sufficient conditions Thursday night to appease the two commission Democrats.

FCC Republicans Chairman Kevin Martin and commissioner Deborah Taylor Tate pointed to the deployment of IPTV service in competition to cable and satellite as one of the "long-standing goal of communications policy" the merger would spur.

They said some of the conditions agreed to by the companies, including offering high-speed braodband to all its combined areas by the end of 2007, plus the offering of a stand-alone broadband service, would encourage broadband deployment, which is a government priority, though they said they would not have imposed such conditions.

But they said some of the conditions--which were necessary to get the Democrats to sign on--were "discriminatory, and run contrary to Commission policy and precedent."

In particular, Martin and Tate said that the "network neutrality" conditions--applicable for at least the first two years--"have very little to do with the merger at hand, and "may cause greater problems than the speculative problems they seek to address."

Democrat Michael Copps seemed pleased with the outcome as far as it went, though he said it could have gone farther toward safeguarding consumers. Still, in his lengthy statement he ticked off conditions he had worked toward that had made it into the agreement: "I believe that the commitments concerning the future of the Internet; consumer access to broadband, video, and advanced wireless services; business prices for high-volume voice and data services; competitor access to UNEs and interconnection; public safety and disaster relief; and the repatriation of jobs to the United States comprise a package that will benefit the American public for years to come....And the conditions are expressly enforceable by the Commission."

Media Access Project, which had pushed for conditions on the merger, praised Copps and fellow Democrat Jonathan Adelstein. "MAP salutes FCC Commissioners Copps and Adelstein for obtaining significant and unprecedented concessions as conditions for approving the ATT/BellSouth merger."

"AT&T capitulated to supporters of an open and neutral Internet," crowed Ben Scott of Free Press, which coordinates the computer company-backed Save the Internet Coalition. "The agreement once and for all puts to rest the bogus argument that no one can define Net Neutrality. The FCC just did it, and the sky hasn't fallen. The conditions placed on this merger will show irrefutably that Net Neutrality and phone company profits are not mutually exclusive."
Chairman Martin warned that the deal would not necessarily become a template for future commission actions. "while the Democrat Commissioners may have extracted concessions from AT&T," he said, "they in no way bind future Commission action.  Specifically, a minority of Commissioners cannot alter Commission precedent or bind future Commission decisions, policies, actions, or rules. 

"Thus, to the extent that AT&T has, as a business matter, determined to take certain actions, they are allowed to do so.  There are certain conditions, however, that are not self-effectuating or cannot be accomplished by AT&T alone.  To the extent Commission action is required to effectuate these conditions as a policy going forward, we specifically do not support those aspects of the conditions and will oppose such policies going forward."

Martin had tried to vote the merger three times before, but met resistance from the Democrats, particularly after the Justice Department imposed no conditions on the merger.
Martin hoped to be able to unrecuse McDowell to be the third vote for a merger with fewer conditions. FCC General Counsel Sam Feder even cleared McDowell to vote, but the endorsement was not a ringing one and McDowell, concerned about appearances of conflict of interest decided to sit the vote out, telling his colleagues it was up to them to reach an agreement.

McDowell's former employer, telco lobby Comptel, had been a party to the merger.
McDowell pointed out that the FCC had been tied 2-2 for much of the previous decade and had managed to vote out mergers and otherwise do its business.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.