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AT&T / Bell South Merger

AT&T Inc. and BellSouth Corp. Application for Transfer of Control , WC Docket No. 06-74, Memorandum Opinion and Order, 22 FCC Rcd 5662 (2007)

"The Federal Communications Commission today approved the merger of AT&T Inc. (AT&T) and BellSouth Corp. (BellSouth). 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. They are:

• 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 Applicants’ 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. Docket No.: 06-74 Wireline Competition Bureau Staff Contact: Nicholas Alexander at 2173, nicholas.alexander

Proceeding

• Letter of Jacquelyne Flemming, AT&T, to Marlene Dortch, Secretary, FCC, CC Docket No. 06-74, filed Feb. 9, 2011 (final compliance letter).
• 4/5/07 Clearwire Spectrum Holdings II LLC Seeks Consent to Transfer Control of Licenses, held by BellSouth Wireless Cable, Inc., from AT&T Inc.. Public Notice: Word | Acrobat
• 3/26/07 FCC Adopts Order on Reconsideration of Condition in AT&T-BellSouth Merger. Order: Word | Acrobat
• 3/26/07 AT&T Inc.-BellSouth Corp. Merger Order.
  • Word : FCC-06-189A2.doc  FCC-06-189A3.doc  FCC-06-189A4.doc
  • PDF : FCC-06-189A1.pdf  FCC-06-189A2.pdf  FCC-06-189A3.pdf  FCC-06-189A4.pdf
  • Text : FCC-06-189A1.txt  FCC-06-189A2.txt  FCC-06-189A3.txt  FCC-06-189A4.txt 
  • News Release (12/29/06): Acrobat
    
• Conditions (Appendix F)
  • Reparations of Jobs to U.S.
  • Promoting accessibility to broadband services: "Within six months of the Merger Closing Date, and continuing for at least 30 months from the inception of the offer, AT&T/BellSouth will offer to retail consumers in the Wireline Buildout Area, who have not previously subscribed to AT&T’s or BellSouth’s ADSL service, a broadband Internet access service at a speed of up to 768 Kbps at a monthly rate (exclusive of any applicable taxes and regulatory fees) of $10 per month"
  • Statement on Video Roll-Out Intentions
  • Public Safety, Disaster Recovery
  • Service to Customers with Disabilities
  • UNEs "The AT&T and BellSouth ILECs shall continue to offer and shall not seek any increase in stateapproved rates for UNEs or collocation that are in effect as of the Merger Closing Date. "
  • Reducing Transaction Costs Associated with (Telecommunications) Interconnect Agreements
  • Special Access
  • Transit Service: "The AT&T and BellSouth ILECs will not increase the rates paid by existing customers for their existing tandem (telecommunications) transit service arrangements that the AT&T and BellSouth ILECs provide in the AT&T/BellSouth in-region territory"
  • ADSL Service
  • Network Neutrality: "Effective on the Merger Closing Date, and continuing for 30 months thereafter, AT&T/BellSouth will conduct business in a manner that comports with the principles set forth in the Commission’s Policy Statement, issued September 23, 2005 (FCC 05-151). "
  • Internet Backbone:
    • "For a period of three years after the Merger Closing Date, AT&T/BellSouth will maintain at least as many discrete settlement-free peering arrangements for Internet backbone services with domestic operating entities within the United States as they did on the Merger Closing Date, provided that the number of settlement-free peering arrangements that AT&T/BellSouth is required to maintain hereunder shall be adjusted downward to account for any mergers, acquisitions, or bankruptcies by existing peering entities or the voluntary election by a peering entity to discontinue its peering arrangement. If on the Merger Closing Date, AT&T and BellSouth both maintain a settlement free peering arrangement for Internet backbone services with the same entity (or an affiliate thereof), the separate arrangements shall count as one settlement-free peering arrangement for purposes of determining the number of discrete peering entities with whom AT&T/BellSouth must peer pursuant to this commitment. AT&T/BellSouth may waive terms of its published peering policy to the extent necessary to maintain the number of peering arrangements required by this commitment. Notwithstanding the above, if within three years after the Merger Closing Date, one of the ten largest entities with which AT&T/BellSouth engages in settlement free peering for Internet backbone services (as measured by traffic volume delivered to AT&T/BellSouth’s backbone network facilities by such entity) terminates its peering arrangement with AT&T/BellSouth for any reason (including bankruptcy, acquisition, or merger), AT&T/BellSouth will replace that peering arrangement with another settlement free peering arrangement and shall not adjust its total number of settlement free peers downward as a result. "
    • "Within thirty days after the Merger Closing Date, and continuing for three years thereafter, AT&T/BellSouth will post its peering policy on a publicly accessible website. During this three-year period, AT&T/BellSouth will post any revisions to its peering policy on a timely basis as they occur. "
  • Forbearance: "AT&T/BellSouth will not seek or give effect to a ruling, including through a forbearance petition under section 10 of the Communications Act (the “Act”) 47 U.S.C. 160, or any other petition, altering the status of any facility being currently offered as a loop or transport UNE under section 251(c)(3) of the Act. "
  • Wireless
  • Divestiture of Facilities
  • Tunney Act
  • Certification
• Quote from Comments of Martin and Tate on Merger Conditions: "Other conditions, however, are unnecessary and may actually deter broadband infrastructure investment. The conditions regarding net-neutrality have very little to do with the merger at hand and very well may cause greater problems than the speculative problems they seek to address. These conditions are simply not warranted by current market conditions and may deter facilities investment. Accordingly, it gives us pause to approve last-minute remedies to address the ill-defined problem net neutrality proponents seek to resolve. Importantly, however, while the Democrat Commissioners may have extracted concessions from AT&T, they in no way bind future Commission action. Specifically, a minority of Commissioners cannot alter Commission precedent or bind future Commission decisions, policies, actions, or rules. Thus, to the extent that AT&T has, as a business matter, determined to take certain actions, they are allowed to do so. There are certain conditions, however, that are not self-effectuating or cannot be accomplished by AT&T alone. To the extent Commission action is required to effectuate these conditions as a policy going forward, we specifically do not support those aspects of the conditions and will oppose such policies going forward."
• 12/29/06 FCC Approves Merger of AT&T Inc. and BellSouth Corp.
  News Release: Acrobat
  Martin & Tate Joint Statement: Word | Acrobat
  Copps Statement: Word | Acrobat
  Adelstein Statement: Word | Acrobat
  McDowell Statement: Word | Acrobat
• 12/28/06 AT&T Files Additional Proposed Merger Commitments. Letter to Marlene H. Dortch, Secretary, Federal Communications Commission, From Robert W. Quinn, Senior Vice President, Federal Regulatory, AT&T (Dec. 28, 2006) (detailing voluntary commitments).
• 10/31/06 Notice of Prohibited Presentation In the Matter of AT&T Inc. and BellSouth Corporation Application for Transfer of Control
• 10/13/06 Commission Seeks Comment on Proposals Submitted by AT&T Inc. and BellSouth Corporation. Public Notice: Acrobat
• 10/13/06 Letter From Chairman Martin Concerning Next Steps for Review of AT&T/Bell South Transfer of Control Application.
• 10/13/06 Letter Concerning the AT&T/BellSouth Merger.
• On October 13, 2006, AT&T submitted a supplemental filing, attached hereto, setting forth proposals made by the Applicants at the request of members of the Commission. The Commission hereby seeks public comment this filing and the proposals contained therein. Interested parties must file comments no later than October 24, 2006. The merger conditions address:
  • Promoting Accessibility of Broadband
  • Public Safety and Disaster Recovery
  • UNEs
  • Special Access
  • Wireless
  • Transit Service
  • ADSL Service
  • Forebearance
• 7/7/06 Second Protective Order. Word | Acrobat
• The AT&T and BellSouth Merger: What Does it Mean for Consumers, Hearing Before the Subcommittee on Antitrust, Competition Policy and Consumer Rights, of the Committee on the Judiciary, United States Senate,109th Cong. 2nd Sess. June 22, 2006
• 5/12/06 Protective Order: Order: Word | Acrobat
• 4/19/06 Commission Seeks Comment on Application for Consent to Transfer of Control Filed by AT&T Inc. and Bellsouth Corporation. Public Notice: Word | Acrobat
• Cm. McDowell recused himself from the merger vote. Internet News Oct 13.

News

• RBOCs: And then there were three (or maybe one), Net Insider 3/7/2006
• Ma Bell gets her family back together, Globe and Mail 3/7/2006
• Consumer Groups Attack AT&T Merger - Ma Bell resurrected, or no big deal?, Broadband Reports 3/7/2006
• AT&T offers DSL subscribers free Wi-Fi, CNET 7/5/2007
• Quietly, AT&T Discounts DSL to Meet Merger Demands, Wash Post 6/19/2007
• $10 768kbps AT&T DSL This Weekend - Must be offered for 2.5 years as merger condition, DSLreports 6/15/2007
• FCC Adopts Order on Reconsideration of Condition in AT&T-BellSouth Merger., FCC 3/27/2007
• FCC Releases Text of AT&T Inc.-BellSouth Corp. Merger Order., FCC 3/27/2007
• AT&T-BellSouth: Together at Last, BWO 1/3/2007
• FCC Approves Merger of AT&T Inc. and BellSouth Corp., FCC 1/3/2007
• FCC Approves AT&T/BellSouth Merger, Internet News 1/3/2007
• AT&T Says Let The Post-Merger Innovation Commence: Bring On The Bundles, Techdirt 1/3/2007
• Kevin Martin To AT&T: Okay, Now Feel Free To Ignore Those Concessions You Just Promised, Techdirt 1/3/2007
• Commissioner McDowell's Statement Regarding His Participation in the AT&T/BellSouth Merger Proceeding., FCC 12/19/2006
• FCC's McDowell Stands By Recusal on Merger Vote, Internet News 12/19/2006
• FCC Official Withdraws From Vote on AT&T-BellSouth Deal, NYT 12/19/2006
• Stalemate Keeps AT& T-BellSouth Merger Off of FCC's Agenda, Wash Post 12/15/2006
• FCC Commissioner Can Vote on AT&T, NYT 12/12/2006
• AT&T/BellSouth Pretend GAO Report Supports Merger Claims, Techdirt 12/12/2006
• Democrats question FCC move on AT&BellSouth deal, Americas Network 12/8/2006
• FCC shopping for AT&T's Christmas present, Isen 12/8/2006
• No 'rubber stamp' on telecom mergers, judge says, CNET 12/1/2006
• FCC Approves AT&T/BellSouth Merger, Internet News 1/3/2007
• AT&T-BellSouth: Together at Last, BWO 1/3/2007
• AT&T Says Let The Post-Merger Innovation Commence: Bring On The Bundles, Techdirt 1/3/2007
• Kevin Martin To AT&T: Okay, Now Feel Free To Ignore Those Concessions You Just Promised, Techdirt 1/3/2007
• (Wifi) Bandwidth bandit faces jail term, Sydney 1/3/2007
• Net neutrality push expected to resume in Congress, CNET 1/3/2007
• Can AT&T Just Ignore New Concessions? - Neutrality advocates cheer, ignore fine print..., Broadband Reports 1/3/2007
• DOJ Approves AT&T-BellSouth Deal - FCC remains the final hurdle, Broadband Reports 10/11/2006
• AT&T faces key test next week in bid to take over BellSouth, Mercury 10/6/2006
• Delay sought in BellSouth-AT&T merger, Houston Chronicle 9/29/2006
• Groups to FCC: No AT&T-BellSouth Approvals Yet, xchange 9/26/2006
• AT&T earnings surge 74% on strong wireless growth, America's Network 10/24/2006
• AT&T Nixes Net-Neutrality Proposal, Multichannel News 10/30/2006
• It ain't over till it's over, Telephony 10/24/2006
• AT&T’s promises to FCC are full of holes, ZDNet 10/17/2006
• AT&T suggests possible merger conditions, Ars Technica 10/17/2006
• Bell buyout blocked, Seatle Times 10/17/2006
• AT&T Makes Network Neutrality Concessions, Internet News 10/17/2006
• Joint Statement by House Commerce Chairman Barton and Senate Commerce Chairman Stevens on AT&T-BellSouth Merger, Senate 10/17/2006