Democracy & Technology Blog Status of merger conditions unclear

Jonathan S. Adelstein

AT&T’s opponents may not get everything they thought they had from the FCC’s review of the AT&T/BellSouth merger. The process was a disgrace, as I discussed here and elsewhere leading up to the final decision. No federal or state regulator identified any competitive or public interest harms, yet Commissioner Jonathan S. Adelstein and Commissioner Michael J. Copps leveraged the process to deliver cash to state and local officials, unwarranted discounts to AT&T’s competitors and 3,000 previously outsourced positions to the labor unions.
AT&T also volunteered to maintain “a neutral network and neutral routing in its wireline broadband Internet access service,” subject to certain limitations. I argue that a nondiscrimination principle applied to the Internet would outlaw the partnership, bundling and pricing strategies that are the basis for all advertising efforts (see, e.g., this and this).

Chairman Kevin J. Martin and Commissioner Deborah Taylor Tate issued a statement which points out that they won’t enforce the net neutrality commitment on AT&T. That’s two out of five votes. But as Chairman, Martin controls the FCC’s agenda and there won’t be any enforcement action for the other commissioners to vote on if he doesn’t want it.

… today’s order does not mean that the Commision has adopted an additional net neutrality principle. We continue to believe such a requirement is not necessary and may impede infrastructure deployment. Thus, although AT&T may make a voluntary business decision, it cannot dictate or bind government policy. Nor does this order.

Martin and Tate also point out that AT&T may have promised more than it can deliver in terms of discounts for its needy competitors. This is because AT&T, as a common carrier, cannot reduce rates for some but not all companies. Martin and Tate serve notice that the wholesale discounts may be dead on arrival.

… even when AT&T attempts to fulfill its merger commitment by filing its tariffs, the Commission is not bound to approve these tariffs. Indeed, consistent with the Commission’s prior policies and precedent, we would oppose such discriminatory practices and would encourage such tariffs to be rejected.

Martin and Tate correctly note that AT&T’s proposed commitments “turn the clock backward to rate regulations of a decade past.” But it had no choice. Similarly, Martin and Tate had no choice but to issue the following declaration:

While the company has voluntarily agreed to these conditions, the Commission is required by law to recognize competition and will continue to use other tools and legal avenues to continue down the deregulatory path envisioned by Congress and adopted by the Commission.

Hance Haney

Director and Senior Fellow of the Technology & Democracy Project
Hance Haney served as Director and Senior Fellow of the Technology & Democracy Project at the Discovery Institute, in Washington, D.C. Haney spent ten years as an aide to former Senator Bob Packwood (OR), and advised him in his capacity as chairman of the Senate Communications Subcommittee during the deliberations leading to the Telecommunications Act of 1996. He subsequently held various positions with the United States Telecom Association and Qwest Communications. He earned a B.A. in history from Willamette University and a J.D. from Lewis and Clark Law School in Portland, Oregon.