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CDD Takes Aim at AT&T/ BellSouth

Public interest group Center for Digital Democracy (CDD) was quick to criticize the proposed merger between AT&T and BellSouth.

"This proposed merger is the direct result of a recent FCC decision which eliminated long-standing safeguards for the Internet," said the Center's Jeff Chester.  "AT&T can now operate its broadband platform (as well as its new digital TV service) as a privately controlled highway. Instead of the Internet reflecting what the federal courts not long ago called 'the most participatory form of mass speech yet developed,' it's now threatened to be reduced to what AT&T called their private "pipes."

The proposed $67 billion merger between, announced over the weekend, could speed AT&T's entry into the TV space. The $37.09 per share price is a 17.9% premium to Friday's closing, according to Merrill Lynch.

Verizon has so far been the most aggressive player among the telephone companies. But CDD is concerned about control over the Internet. The FCC has ruled that broadband suppliers do not have to make their networks available to unaffiliated Internet service providers, although it has encouraged them to do so.
CDD and others are pushing for a so-called "network neutrality" provision in Congress' current rewrite of telecommunications regulations to reflect the explosion of broadband service.

It has been over two decades since the government broke up AT&T and spun-off local phone service into the Baby Bells, but the competitive landscape has changed dramatically, with cable into phone and telco into video, and the Baby Bells into long-distance.  Merrill Lynch predicts the deal will likely go through, saying "the combination does not change RBOC ownership of wireless-AT&T and BellSouth already own Cingular. Second, access line losses in the 5% to 6% range are evidence of inter-modal competition, to date primarily from wireless-in the future, increasingly from cable."
And it the merger provides a stronger telco video competitor to cable for price and service, it will be advancing the stated goals of many in Congress, the FCC, and the administration.