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AT&T Offers Net Neutrality Concessions To Win Merger Approval

By Martin H. Bosworth
ConsumerAffairs.com

December 29, 2006

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AT&T has offered concessions to the FCC to sweeten the pot for approval of its mega-merger with BellSouth, but some tricky legal language may end up costing consumers more in the end.

The 20-page list of offers was delivered to the FCC late yesterday (Dec. 28) in the hope that the commission would vote on the merger before the end of the year.

The merger talks have been stonewalled between the 2 Republican and 2 Democratic members of the commission who can vote. Robert McDowell, the fifth FCC commissioner, formally recused himself on the grounds that he once represented competitors of AT&T as a lobbyist.

Chief among the concessions was a promise to maintain standards of "net neutrality" on AT&T's broadband services for 30 months from the date of the merger approval.

Net neutrality, the principle of maintaining free and equal access to all Internet content, was staunchly opposed by AT&T, which wants to offer high-speed premium services and prioritize delivery of that content at the expense of its existing service.

"[I]n the interest of facilitating the speediest possible approval of the merger by the Commission, Applicants agree to the attached merger commitments, which are significantly more extensive than those submitted on October 13," AT&T said in its statement.

Other concessions included a promise to reestablish 3,000 jobs in America that had been outsourced to other countries, and an offer of stand-alone DSL for $19.95 a month in BellSouth's territories.

Consumer groups hailed the agreement as a victory that enables low-income neighborhoods to breach the digital divide, as well as for supporters of net neutrality overall.

"This merger endangers long-term competition," said Consumers' Union vice president Gene Kimmelman. "But by making AT&T's high-speed Internet service available to consumers for less than $20 a month, the FCC could open the door for consumers to connect low-cost Internet telephone service to broadband and thereby pressure the market to keep delivering lower prices for all telecom services."

Ben Scott, policy director of media watchdog Free Press, agreed.

"Making Net Neutrality a condition of the largest merger in telecommunications history would set an important precedent," he said. "For free speech, democratic participation and economic innovation to thrive online, Net Neutrality must be the law."

Bait And Switch?

However, AT&T may have pulled a fast one.

In enumerating its net neutrality concession, AT&T said that, "This commitment also does not apply to AT&T/BellSouth's Internet Protocol television (IPTV) service."

AT&T's push for IPTV is the cornerstone of its new UVerse high-speed Internet project, and the agreement may allow its UVerse rollout to sidestep its own net neutrality guarantee.

Commenters at technology blog TechDirt noted that, "AT&T promises not to violate network neutrality on a network they never intended to use that way, and carves out permission to use it on their new network, where they had planned all along to set up additional tollbooths."

The AT&T peace offering comes on the heels of the FCC's decision to ease rules for telecom companies to offer video franchising in communities. The new rules eliminate requirements for companies to "build out" service to all parts of a town or region, and streamlines the approval process.

Critics charged the new rules will empower telecoms like AT&T to "cherry pick" by selling high-speed broadband and TV services only in the most affluent neighborhoods.

AT&T reiterated its commitment to deliver high-powered services like UVerse in the concession letter.

"AT&T is committed to providing, and has expended substantial resources to provide, a broad array of advanced video programming services in the AT&T in-region territory," the company said.

It remains to be seen if the concessions are enough to push the FCC to vote on the merger.

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