FCC Plans A Vote On AT&T-BellSouth Merger Concessions

AT&T takes a more conciliatory stance in its rush to win regulatory approval before Congress changes hands in January.

W. David Gardner, Contributor

December 29, 2006

2 Min Read

With a self-imposed year-end deadline, as well as a possibly unfriendly Democrat-dominated Congress looming, AT&T submitted a list of last-ditch concessions to the Federal Communications Commission, hoping to sway its opinion to get approval of its acquisition of BellSouth.

The $86 billion merger would create a telecom giant by expanding AT&T's reach to an additional 22 states and consolidating ownership of Cingular Wireless in the hands of the new company.

Robert W. Quinn Jr., an AT&T senior VP, said in a letter Thursday to the FCC that the new concessions are "significantly more extensive" than what the telecom company had proposed in October.

The FCC has been stalemated on the deal, because its commissioners have deadlocked 2-2, on approval. AT&T is hoping the new concessions will break the tie vote. The company says it would treat all Internet content equally in an important "net neutrality" concession. AT&T says it won't levy extra charges on Internet companies like Google and Yahoo.

The net neutrality issue had been a tough sticking point with many public interest and consumer groups. Public Knowledge, a public interest organization, hailed the AT&T filing Friday. "By promising not to offer any service that privileges, degrades, or prioritizes any packet transmitted over AT&T/BellSouth's wireline broadband Internet access service based on is source, ownership, or destination, AT&T has agreed to essential net neutrality principles," said Public Knowledge president Gigi Sohn.

In another important concession, AT&T agreed to sell DSL as an individual service for $19.95 a month without requiring consumers to also purchase telephone service. In addition, the firm said it would repatriate "3,000 jobs that are currently outsourced by BellSouth outside of the U.S. At least 200 of the repatriated jobs will be physically located with New Orleans."

Other concessions involved arcane workings of access fees that will likely result in substantial savings for large businesses. Also, some wireless licenses will be divested by AT&T, according to the concession filing.

For months, AT&T had said it wanted to consummate the merger by year's end. Approval before the new Democratic Party-controlled Congress takes seat would also be advantageous for AT&T, because some Democrats generally have been critical of the merger, which combines two of the largest Baby Bells that had broken up more than two decades ago when the original AT&T was dissembled.

In his letter, Quinn, senior VP in AT&T's federal regulatory unit, noted that the Department of Justice, 19 states, and three foreign countries had approved the merger even before the concessions were made.

As of Friday morning, the FCC had made no comment on the AT&T proposal. The commissioners can vote by computer so a decision could be made quickly.

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