Monday, December 04, 2006


Horsetrading for Net Neutrality

ATTFCC approval is the last thing standing in the way of AT&T (NYSE: T) connecting with Bell South (NYSE: BLS), which, at $82.2B, is the largest telcom industry merger in US history.

The US regulator is currently deadlocked along party lines with 2 commissioners on each side of the issue. Democrat commissioners are said to be seeking concessions from AT&T prior to giving their assent to the deal. The Justice Department gave its approval on Oct. 11, with no competitive concerns nor requiring the divestiture of any assets. The takeover has also been approved by regulators in 18 states.

FCC chair Kevin Martin is moving to permit commissioner Robert McDowell to vote on the issue, breaking the tie. McDowell once worked for COMPTEL and had previously declared a conflict of interest.

Concessions could include: wholesale price caps on access to AT&T's local lines; divest unused wireless spectrum; pledges to not discriminate against certain Internet traffic; and, offer reasonably priced naked DSL service.

The complaints sound familiar to observers of the regulatory frameworks around the world. Will partison politics in the US regulator affect the conditions of approval? Are conditions on mergers really the best way to regulate, if the rules don't apply to all ILECs?

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