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AT&T Knows When to Fold ‘em

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Updated, Friday 9 AM. Look, we told you the AT&T-BellSouth deal would get done. And with all its lawyers and lobbyists, it’s no surprise that AT&T made the smart political move, suggesting a few minor concessions that should grease the wheels at the FCC and help make Ma Bell bigger, sooner.

While it may be painted elsewhere as a victory for the Net neutrality team, don’t be fooled: Jim Cicconi and crew know it’s better to agree to the FCC’s watered-down version of NN rules than to play hardball and give Ed Markey an excuse to start hearings immediately in 2007.

Though big telcos can probably always count on the Bush administration to veto any laws they find unacceptable, they are probably guessing that the prez will have other things than telecom reform on his front burner for the near future.

And while the concession to supply naked DSL seems to have some teeth attached this time around (unlike last time), the fine print shows that AT&T only agrees to put a $19.95-per-month price tag on 768Kbps service, a speed which in a year may seem as quaint as dial-up does today. Remember this wording, after the 768K stuff: “AT&T/BellSouth may make available such services at other speeds at prices that are competitive with the broadband market taken as a whole.” In other words, 1.5K DSL and voice for… $20.95.

UPDATE: Longtime industry watcher Dave Burstein further parses AT&T’s concessions, saying there’s even less there than meets the eye (specifiically in regards to the Net neutrality wording, and leased-line agreements) in a comment below.

Smackdown score? By making AT&T back down a bit, Dem commissioners Copps and Adelstein earn at least a draw here. Chairman Kev will try to paint this one as a much-needed win, but all those really involved know that the telco taskmasters aren’t happy about how it all went down. No bracelet here for Martin.

3 Responses to “AT&T Knows When to Fold ‘em”

  1. HumbleOpinion

    “Though big telcos can probably always count on the Bush administration to veto any laws they find unacceptable, “

    As far as I remember, President Bush has only vetoed one bill in his two terms in office. It is probably the lowest veto rate of any president, and not something the telcos would count on. AT&T is going to have win this fight the old-fashioned way, fake concessions and pay-offs.

  2. Jesse Kopelman

    I love how most of the concessions are merely restatements of earlier promises and regulatory commitment. It’s like they are saying, “sure we were lying all the other times when we agreed to this stuff, but this time we really mean it!”

    I think the only substance here is that they have agreed to sell their 2.6 GHz spectrum. Since the likely buyer is someone who already has similar spectrum (Clearwire), I’m not sure how this does anything to help consumers. At least it will make things neater when Sprint buys Clearwire in 2 or 3 years.

  3. Paul, Om

    It’s really much worse than it looks when you get into the details. AT&T basically gave away nothing. Here’s how I’m writing it, (draft)

    “I call them the black ninjas. They work by night and are very, very good.” FCC Chairman Bill Kennard explaining telco lobbyists

    “Jim Cicconi and Bob Quinn are the best lobbyists in Washington,” President of SBC Bill Daley lamented after they beat him a while back. They now work for AT&T, and have proven their brilliance by convincing most of D.C. they accepted network Neutrality to get the BellSouth merger approved, while burying on page 10 a sentence that made their concession almost meaningless. Their proposal came out Thursday night and I’ve worked all night. Apologies to non-U.S. readers for putting this first, but AP reports they plan to sneak it through Friday before the holiday.

    AT&T offer on Net Neutrality sounds good, and might be a model to countries like Japan that are considering Net Neutrality rules. AT&T agreed “not to provide … any service that privileges, degrades or prioritizes any packet transmitted over AT&T/BellSouth’s wireline broadband Internet access service based on its source, ownership or destination.”

    A seemingly innocuous later sentence effectively makes that almost meaningless. “This commitment also does not apply to AT&T/BellSouth’s Internet Protocol television (IPTV) service.” AT&T has always intended to give paying customers priority by routing them over the “IPTV” part of their network, with Alcatel routers and Microsoft software designed for QOS. They don’t even have the equipment for that kind of QOS on what they call “wireline broadband Internet access service.” The lawyers fighting this in D.C. won’t even discover they’ve been bamboozled until afterwards if the commission goes ahead and rushes this through. The entire set of “concessions” remains so insignificant that Merrill Lynch’s “immaterial” judgment still holds.

    The other stuff in the 20 pages adds surprisingly little substance. For example, the 85% DSL promise happens to be the level BellSouth has already reached. Most of the special access rates they agreed to freeze are ones AT&T CEO, Rick Lindner, told Wall Street “have been declining as a result of competition.”

    Incredibly effective persuasion, which at least in early drafts even bamboozled public interest advocates and Commission Democrats. With luck, they’ll analyze the final filing, released late Thursday, before making up their mind. It would be scandalous if an $85B merger goes through on terms revealed only 12 hours before.