Benton RSS Feed

The final terms of the $85 billion AT&T-BellSouth transaction, the largest telecommunications deal in U.S. history, underscored the key role of the FCC. The agency is charged by Congress with looking out for the interests of consumers, FCC Commissioner Jonathan Adelstein noted. He says companies that approach the FCC in the future looking for merger approvals should keep in mind that "our job is to look out for the public interest, not the interests of the companies we oversee."

AT&T-BELLSOUTH DEAL CALLED 'BREAKTHROUGH' FOR CONSUMERS
[SOURCE: USAToday, AUTHOR: Leslie Cauley]
The Federal Communications Commission's handling of the $85 billion AT&T-BellSouth merger sets a "new baseline" for protecting the interests of consumers, FCC Commissioner Jonathan Adelstein said in an interview over the weekend. The FCC's approval of the merger on Friday allowed the deal to close immediately. To secure the FCC's blessing, AT&T agreed to a list of consumer-friendly concessions. Among them: For the next 30 months, AT&T agreed to sell "naked" DSL -- meaning consumers don't have to buy any other service from AT&T to get the DSL service — for just $19.95 a month. That's less than half the $44.95 that AT&T now charges. AT&T also agreed to a "net neutrality" provision that will require the company to treat all broadband services, its own as well as rivals', equally for the next two years. That means AT&T can't favor its own traffic, in terms of transmission speed and quality. In addition, AT&T agreed to sell some unused wireless spectrum. That could enable a new rival to enter the market, creating more options for consumers. Commissioner Adelstein called the settlement a "breakthrough" for consumers in that it establishes a new standard of behavior for the USA's communications giants. Big companies such as AT&T and Comcast "have told the FCC that they can't live with a net neutrality provision in place," Adelstein said. "They can." The fact that AT&T agreed to such an aggressive net neutrality clause proves that, he said. Though the settlement applies only to AT&T, other companies will be hard-pressed to ignore it, says Gene Kimmelman, public policy director of Consumers Union. "There will be enormous scrutiny of any company that does not live by these standards." The concession on naked DSL is significant, Kimmelman says, because it will permit consumers to buy DSL and phone services from different companies without being financially penalized. Right now, he notes, AT&T charges as much for naked DSL as it does for DSL and phone combined.
http://www.usatoday.com/printedition/money/20070102/fcc02.art.htm

INDUSTRY BRACES FOR NET NEUTRALITY FALLOUT
[SOURCE: Wall Street Journal, AUTHOR: Amy Schatz Amy.Schatz@wsj.com]
AT&T's capitulation on the issue of "net neutrality," which led U.S. regulators to approve its $86 billion purchase of BellSouth, may have consequences far beyond the company. Supporters of net-neutrality rules, which require equal treatment of all traffic from the Internet backbone to a consumer's PC, say AT&T's agreement provides a template for future legislation and may at least temporarily hinder hopes of other telecom and cable companies from monetizing their Internet lines by charging companies such as Google or Amazon.com to give their traffic priority and faster service. The net-neutrality condition expires in two years. The FCC specifically exempted AT&T's Cingular wireless business and the portion of its network dedicated to providing its Internet television service from the conditions. Other telecom companies aren't required to abide by the conditions agreed to by AT&T, but many may feel compelled to do so because of the public backlash they would face by ignoring them. FCC Chairman Kevin Martin doesn't believe net-neutrality rules are necessary because there hasn't been evidence of problems, and he has enough votes among his Republican colleagues on the five-member board to block them. On Friday, he offered a rebuke to the FCC's two Democrats, calling the net-neutrality conditions they extracted from AT&T "unnecessary" and "discriminatory." He stopped just short of vowing that no new industrywide net-neutrality rule would pass under his watch.
http://online.wsj.com/article/SB116768394926464050.html?mod=todays_us_pa...
(requires subscription)

FRANCHISE REFORM
[SOURCE: Wall Street Journal, AUTHOR: Editorial Staff]
[Commentary] The Federal Communications Commission deserves full marks for its ruling last month that will make it easier for phone companies to enter the cable television business. The usual suspects are crying foul, but this is a decision that really will help millions of consumers who are currently paying cable rates dictated by anticompetitive video franchise agreements. The FCC's action is an attempt to streamline this process and eliminate the shake-downs that municipalities have been using to circumvent the 5% franchise fee cap. Under the new rules, states and local authorities must complete negotiations within 90 days. They also won't be allowed to impose "unreasonable" build-out requirements, such as demanding that phone companies offer their services everywhere that cable firms do within months of being granted a franchise agreement. We'd just as soon see such requirements scrapped altogether -- after all, the Bells are entering a competitive market with no guarantee of success -- but this is a step in the right direction. In the wake of the FCC's party-line 3-2 ruling, in which the agency's two Democrats dissented, the cable lobby is complaining that phone companies are receiving preferential treatment. Democratic Commissioner Jonathan Adelstein told reporters that the decision "undermines" local authority, by which he means poaching by thousands of local politicians. In fact, it's the local franchising authorities who have been undermining competition by protecting incumbents. And the cable industry's complaints are unpersuasive at best. Cable companies have marched right into the telephony market, making it more competitive, without facing the regulatory hurdles they want kept in place to prevent video competition from the Bells. Far from playing favorites, the new FCC rules aim to make the telecom playing field more level. They were long overdue.
http://online.wsj.com/article/SB116768346542164038.html?mod=todays_us_op...
(requires subscription)