Commission Approves AT&T-BellSouth with Conditions

The FCC finally approved AT&T Inc.’s (“AT&T) merger with BellSouth Corp. (“BellSouth”) late on December 29, with the telephone companies agreeing to several conditions, including a controversial network neutrality provision aimed at protecting Web players such as Microsoft and Google. AT&T was eager to close the $80 billion-plus deal for several months. FCC approval was the last hurdle facing the merger. AT&T was forced to yield on network neutrality because FCC Democrats Michael Copps and Jonathan Adelstein insisted on protecting Internet-based providers of data, video, and applications from potential anticompetitive harms. Because four FCC members voted – Republican Robert McDowell did not participate – Copps and Adelstein held a veto over the deal.
In an 11-page letter made public Thursday night, AT&T said it would “maintain a neutral network and neutral routing in its wireline broadband Internet access service.” In terms of definitional substance, AT&T said it would not offer “any service that privileges, degrades or prioritizes any packet transmitted … based on source, ownership or destination.” The two-year pledge, AT&T added, would not apply to its IPTV networks or to managed IP networks on behalf of large business customers. The commitments also go away if Congress passes a net neutrality law within two years. In other concessions, AT&T promised to sell DSL service for $19.99 a month on a standalone basis, meaning the consumer would not need to buy “circuit switched voice grade telephone service” at the same time. The 30-month commitment, by its terms, would not prevent AT&T from conditioning the DSL purchase on the purchase of some other service, such as pay-TV or mobile phone service.

For more information contact:

Olev Jaakson at ojaakson@dbmlawgroup.com.