As I wrote this morning about the last minute deal offered by AT&T (NYSE: T) to gain FCC approval of its merger with Bell South (NYSE: BLS), I thought the net neutrality provisions were more sizzle than substance. But it was enough to win over the Democrats who clearly didn’t want to stand in the way of other benefits made possible by the merger.

The FCC approved the deal late Friday afternoon, clearing the final regulatory roadblock for the largest telecom industry merger in the US. The merged company will have close to $120B in annual revenues, nearly 70M access lines and about 300,000 employees.

January 1, 1984 was the day that AT&T spun out 7 regional operating companies. 23 years later, a large part gets put back together again.

AT&T (NYSE: T) has made some commitments to the FCC in order to win approval for its merger with Bell South (NYSE: BLS). I wrote about some of these earlier.

The section on network neutrality begins with a commitment to uphold the FCC’s principles set out in a 2005 policy statement for 30 months following the closing date of the merger.

• To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled to access the lawful Internet content of their choice.
• To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled to run applications and use services of their choice, subject to the needs of law enforcement.
• To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled to connect their choice of legal devices that do not harm the network.
• To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled to competition among network providers, application and service providers, and content providers.

These are pretty tame principles, explaining why some “save the internet” advocates sought greater anti-discrimination provisions, which AT&T goes on to provide with a 24 month sunset.

Why is AT&T only willing to sign up for 30 months to these basic FCC principles?

Earlier in the month, I wrote about the horse-trading underway to gain FCC approval for the AT&T (NYSE: T) merger with Bell South (NYSE: BLS).

In a letter to the FCC yesterday, AT&T makes a number of new commitments to try to win over the support of at least one of the two Democrat Commissioners who oppose approving the deal.

AT&T/BellSouth also commits that it will maintain a neutral network and neutral routing in its wireline broadband Internet access service. This commitment shall be satisfied by AT&T/BellSouth’s agreement not to provide or to sell to Internet content, application, or service providers, including those affiliated with AT&T/BellSouth, any service that privileges, degrades or prioritizes any packet transmitted over AT&T/BellSouth’s wirelines broadband Internet access service based on its source, ownership or destination.

This is the portion of the commitment that people point to. However, there are conditions.

This commitment shall apply to AT&T/BellSouth’s wireline broadband Internet access service from the network side of the customer premise equipment up to and including the Internet Exchange Point closest to the customer’s premise, defined as the point of interconnection that is logically, temporally or physically closest to the customer’s premise where public or private Internet backbone networks freely exchange Internet packets.

This seems to permit AT&T flexibility within its own backbone.

This commitment does not apply to AT&T/BellSouth’s enterprise managed IP services, defined as services available only to enterprise customers 16 that are separate services from, and can be purchased without, AT&T/BellSouth’s wireline broadband Internet access service, including, but not limited to, virtual private network (VPN) services provided to enterprise customers. This commitment also does not apply to AT&T/BellSouth’s Internet Protocol television (IPTV) service. These exclusions shall not result in the privileging, degradation, or prioritization of packets transmitted or received by AT&T/BellSouth’s non-enterprise customers’ wireline broadband Internet access service from the network side of the customer premise equipment up to and including the Internet Exchange Point closest to the customer’s premise, as defined above.

Which seems to permit AT&T to offer its own TV services as a preference to over-the-top TV. It is also interesting that the commitment not to discriminate based on “source, ownership or destination” does not include “type of application.” Could the company degrade an entire class of service, such as over-the-top VoIP or peer-to-peer file exchange?

The other potential way for AT&T around the commitment is simply waiting two years or hoping for legislation that addresses network neutrality, possibly permitting carriers more flexibility.

This commitment shall sunset on the earlier of (1) two years from the Merger Closing Date, or (2) the effective date of any legislation enacted by Congress subsequent to the Merger Closing Date that substantially addresses “network neutrality” obligations of broadband Internet access providers, including, but not limited to, any legislation that substantially addresses the privileging, degradation, or prioritization of broadband Internet access traffic.

The concessions seem to be enough to please the “Save the Internet” crowd. Will it, together with the rest of the offer, be sufficient for the FCC holdouts?