FCC Greenlights AT&T Merger With Bellsouth
Commission Concludes That Significant Public Interest Benefits Are
Likely to Result
by Stephen Heiser
Tues, January 2, 2007
The Federal Communications Commission last week approved the merger of
AT&T Inc. and BellSouth Corp. The Commission concluded that significant
public interest benefits are likely to result from this transaction.
Benefits to consumers include:
-- Deployment of broadband throughout the entire AT&T-BellSouth in-region
territory in 2007.
-- Increased competition in the market for advanced pay television
services due to AT&T's ability to deploy Internet Protocol-based video
services more quickly than BellSouth could do so absent the merger.
-- Improved wireless products, services and reliability due to the
efficiencies gained by unified management of Cingular Wireless, which is
now a joint venture operated by BellSouth and AT&T.
-- Enhanced national security, disaster recovery and government services
through the creation of a unified, end-to-end IP-based network capable
of providing efficient and secure government communications.
-- Better disaster response and preparation from the companies
because of unified operations.
The Commission's analysis of competitive effects focused on six key
groups of services.
-- Special access competition. The record indicates that, in a small
number of buildings in the BellSouth in-region territory where AT&T
and BellSouth are the only carriers with direct connections, and where
entry is unlikely, the merger is likely to have an anticompetitive
effect. The Commission found that a commitment by AT&T to divest
indefeasible rights of use (IRUs) to those facilities adequately
remedied the competitive harm. The Commission further found that the
merger was not likely to result in anticompetitive effects with
respect to other special access services that combine one carrier's
own facilities with those of another.
-- Retail enterprise competition. The Commission found that the
merger is not likely to have anticompetitive effects for enterprise
customers, even though the applicants currently compete against each
other with respect to certain types of enterprise services and some
classes of enterprise customers. The Commission found that competition
for medium and large enterprise customers should remain strong after
the merger because medium and large enterprise customers are
sophisticated, high-volume purchasers of communications services and
because there will remain a significant number of carriers competing
in the market.
-- Mass market voice competition. The Commission concluded that the
merger is not likely to have anticompetitive effects in the mass
market. The Commission found that neither BellSouth nor AT&T is a
significant present or potential participant in this market outside of
their respective regions. Consequently, the Commission found that
neither party was exerting significant competitive pressure on the
other in their respective in-region territories. The Commission
further noted that the rapid growth of intermodal competitors --
particularly cable telephony providers (whether circuit-switched or
Voice over IP (VoIP) -- is an increasingly significant competitive
force in this market, and anticipates that such competitors likely
will play an increasingly important role with respect to future mass
market voice competition.
-- Mass market Internet competition. The Commission found that the
merger is not likely to result in anticompetitive effects for mass
market high-speed Internet access services. Specifically, the
Commission concluded that the merger caused no horizontal effects for
these services because neither BellSouth nor AT&T provides any
significant level of Internet access service outside of its respective
region. The Commission also concluded that, while the merger may
result in some vertical integration, the record did not support
commenters' conclusions that the merged entity will have the
incentive to act anticompetitively in the mass market high-speed
Internet access services market.
-- Internet backbone competition. The Commission concluded that the
merger is not likely to result in anticompetitive effects in the
Internet backbone market. The Commission found that the merger is not
likely to cause the Tier 1 backbone market to tip to monopoly or
duopoly, nor is it likely to increase the Applicant's incentive
and/or ability to raise rivals' costs.
-- International competition. The Commission found that the merger is
not likely to result in anticompetitive effects for international
services provided to mass market, enterprise, or global
telecommunications services customers. The Commission also concluded
that the merger is not likely to result in anticompetitive effects in
the international transport, facilities-based IMTS, or international
private line markets.
-- In addition, on December 28, 2006, AT&T made a series of voluntary
commitments that are enforceable by the Commission and attached as an
Appendix. These conditions are voluntary, enforceable commitments by
AT&T but are not general statements of Commission policy and do not
alter Commission precedent or bind future Commission policy or rules.
Action by the Commission, and effective upon adoption, Friday,
December 29, 2006, by Memorandum Opinion and Order. Chairman Martin
and Commissioner Tate, with Commissioners Copps and Adelstein
concurring, and Commissioner McDowell not participating.