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AT&T / BellSouth Merger Approved

December 30, 2006

The FCC today approved the merger of AT&T and BellSouth after the companies made concessions that broke the 2 -2 Republican/Democrat tie.

The most significant demand of the two Democrats was that AT&T agree to a "net neutrality" policy for the first 30 months. The net neutrality issue was the bugaboo that kept the mother-of-all-bills telecom legislation stuck in the Senate this year, thereby blocking a national video service franchise system. (that's the tenuous link that got this story into this digital television web site)

Anyway, the term net neutrality was never defined during all the debate in Congress, but more or less it means that big telecom companies (eg. AT&T) cannot give more favorable (faster, higher bandwidth) service to some web sites than to other web sites that aren't ponying up the bucks for better treatment.

The Democratic-controlled Congress is now expected to formally define net neutrality in this coming session and apply it to all carriers.

Here's the FCC's list of benefits to consumers from this merger:

  • Deployment of broadband throughout the entire AT&T-BellSouth in-region territory in 2007.

  • Increased competition in the market for advanced pay television services due to AT&T's ability to deploy Internet Protocol-based video services more quickly than BellSouth could do so absent the merger.

  • Improved wireless products, services and reliability due to the efficiencies gained by unified management of Cingular Wireless, which is now a joint venture operated by BellSouth and AT&T.

  • Enhanced national security, disaster recovery and government services through the creation of a unified, end-to-end IP-based network capable of providing efficient and secure government communications.

  • Better disaster response and preparation from the companies because of unified operations.

AT&T's revised and more extensive concessions enabling the break in the impasse include the following:

During 2007, AT&T/BellSouth will offer broadband internet service to 100% of residential customers in AT&T and BellSouth territory. They define broadband service as speeds over 200 kbps in at least one direction.

AT&T/BellSouth will provide an ADSL modem for free (plus S&H) to its dial-up customers if they agree to a twelve month contract.

AT&T/BellSouth will provide during a limited time period to new broadband customers in its "Wireline Buildout Area" broadband internet access (up to 768 kbps) for $10/month (plus taxes and other fees). While not clear, I believe this service offering only applies to its retail telephone/voice customers.

AT&T/BellSouth promises to rollout a video programming service.

AT&T/BellSouth will make available a Stand Alone 768 Kbps broadband service to customers during a period of 30 months. Price is $19.95 per month. This is different than the $10/month service because here the customer does not have to buy regular AT&T/BellSouth telephone/voice service.

There is a boat-load of less-interesting-to-the-consumer concessions. Read the FCC's full press release with attachments.