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Watch Out, Consumers: Here Comes the AT&T Steamroller

05/25/2011 11:50 am ET

If you have missed the big news, telecommunications giant AT&T (which includes the old SBC) said this afternoon it will acquire Atlanta-based BellSouth for $67 billion.

There's a lot of politics behind this deal, much of which I discuss in a new post I've made in my ZDNet telephony and convergence blog. I write about why this merger is happening, its chances of being approved with regulations to help consumers, as well as the effects of this merger on your phone bill and the phone industry.

Here are some excerpts from my post:

Q. Will this merger be approved?

A. Given their friendliness toward big telecom, the Bush Administration and the Federal Communications Commission are likely to let the deal sail through with only minor revisions.

Q. What does this mean for "net neutrality"?

A. AT&T CEO Ed Whitacre is both the driving force and the CEO of the acquirer. He is on record at favoring a multi-tiered Internet where large broadband content vendors (such as competing VoIP providers) pay for the privileges of fast and efficient network transport. Although the Democratic minority on the FCC is likely to raise some major concerns, they are, after all, not in charge. Given that political reality, I don't see the Feds pushing the wholescale abandonment of those goals as a pre-condition to merger approval.

Q. Yes, but what about fears that Robert McDowell- a new FCC Commissioner nominee who may appear before a Senate confirmation committee hearing as early as this Thursday- will not be sympathetic to AT&T? Currently counsel for a small telecommunications firm, McDowell is on record at opposing the AT&T-SBC merger, as well as the one between Verizon and MCI.

A. I am going to sound jaded here, but I have to think McDowell has been throughouly vetted by the White House. If there was doubt about his positions, they would have found someone else to nominate. So think of Robert McDowell as the "Samuel Alito" of telecommunications- inspected and selected.

Q. You said the Feds would not push for "wholesale abandonment" of a multi-tiered Internet that AT&T wants. Will there be any effort to modify AT&T- and to a more muted but just-as-determined Verizon's - position?

A. Yes, there may be some such effort. There may be dictates that an expanded AT&T as well as Verizon may be prohibited from overt crippling of competing services. I do think this provision may be specified, but other practices, such as favored bandwidth allocation won't be specifically prohibited or allowed. There, I see some sort of "shall be required to negotiate in good faith" provision that will be sufficiently vague and toothless for AT&T and Verizon to accept.

Q. Yes, but what about Senator Ron Wyden's "net neutrality" bill?

A. This bill was largely sparked by Ed Whitacre's rhetoric. News that the company he runs wants to take over yet another telecommunications giant will ramp up the fever pitch among the measure's adherents. Yet with a party in control of the Senate that tends to defer to big business interests, I don't see Wyden's bill passing in present form. Some sort of diluted measure has a chance, only because this is an election year.

Q. One-third of the Senate and all of the House are up for re-election this year. How does the timing of the merger announcement take the upcoming 2006 mid-term elections into account?

A. It most certainly factors this in. Democrats- the party of which Wyden is a member- sense an opportunity to re-take the Senate this November. If that happens a net neutrality bill might find a better chance of passing. If the merger has already been approved by regulatory agencies before November, that means that a net neutrality law with provisions that could conceivably affect the nature of what is approved would not be in place before the merger goes thru.

Shameless Self-Promotion for sure- but read my complete analysis of what all this means here.

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