Regulators approve AT&T-BellSouth merger

The FCC vote on Friday was the last regulatory hurdle. The Justice Department approved the merger on Oct. 11 without conditions, a move that angered many Democrats.

In an effort to win over Copps and Adelstein, AT&T offered some concessions in October, but they were rejected. AT&T’s senior vice president for regulatory affairs, Robert W. Quinn Jr., called the conditions that were finally accepted Friday “significantly more extensive” than those first offered by the company.

The new offer extends the lifespan of many conditions from 30 months to 42 months or longer.

Among the promises that AT&T made:

• An offer of stand-alone, DSL Internet service to customers in its service area for $19.95 per month for 30 months. The offer lets customers in AT&T and BellSouth service areas to sign up for high-speed Internet access without being forced to buy other services.
• To cap rates for four years on “special access” customers, usually competitors and large businesses that pay to connect directly to a regional phone company’s central office via a dedicated fiber optic line.
• To divest all of the 2.5 GHZ spectrum currently licensed to BellSouth within one year of the merger closing date.
• To bring back to the United States by the end of 2008 some 3,000 jobs that were sent overseas by BellSouth, with at least 200 of the jobs to be in New Orleans.

The most difficult item in the negotiators was network neutrality.

AT&T promised to not to give an advantage to any content provider’s traffic over its high-speed Internet network. Consumer activists and some Web sites had feared the company could have sold better-quality transmission service to Internet companies that would pay it the highest rates.

Martin was unconvinced the network neutrality provisions are necessary.

“The conditions regarding net neutrality have very little to do with the merger at hand and very well may cause greater problems than the speculative problems they seek to address,” he wrote. “These conditions are simply not warranted by current market conditions and may deter facilities investment.”

Meanwhile, Rep. John Dingell, D-Mich., incoming chairman of the House Energy and Commerce Committee, indicated his displeasure in a statement that said the process followed by the FCC may be “suitable for committee review.”

Earl Comstock, president and CEO of Comptel, a group that represents competitors of AT&T, said he would have preferred to see more conditions from AT&T, and questioned why the compromise came so quickly.

“Compared to where it was in the fall, there was definite progress,” he said of the deal. “But given the negotiating position (of the Democrats) it could be better.”

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