Thursday, October 12, 2006

AT&T/BellSouth Offer Concessions, FCC Postpones Decision to Nov 3

The FCC once again postponed a vote on the AT&T + BellSouth merger, as two of the commissioners sought additional time to consider the decision. FCC Commissioners Michael Copps and Jonathan Adelstein, both Democrats, argued that serious questions remain as to whether the merger is in the public interest. They requested that FCC Chairman Kevin Martin remove the proceeding from the "Sunshine" process of open meetings, enabling the Commission to negotiate privately with the applicants and to solicit further public comment on a set of concessions offered by the companies. A new FCC meeting has been scheduled for November 3 to consider the issue.

In a press statement, AT&T said: "We firmly believe, as do three foreign countries, 18 state commissions and the Department of Justice -- every regulatory or legal entity that had an obligation to examine the benefits of this merger -- that no conditions on this merger are necessary for this combination to be a public benefit.

However, we are open to discussing with the Democratic FCC Commissioners reasonable conditions on the merger in order to obtain unanimous approval, so long as they do not affect our ability to deliver merger benefits to customers and shareowners, given the intensely competitive environment in which we operate."

In a separate statement filed with the FCC, the companies outlined a set of concessions that they abide by if the merger is approved. This list includes:

100% Broadband Coverage: By December 31 2007, AT&T/BellSouth will offer broadband (200 kbps in at least one direction) to 100% of the residential living units in its combined territory. To meet this commitment, the company will offer broadband to at least 85% of such living units using wireline technologies. The reaming units might be reached using satellite broadband or WiMAX technologies.

AT&T/BellSouth commits that for at least 30% of the incremental deployment after the merger closing date necessary to achieve the wireline buildout area commitment will be to rural areas or low income living units.

AT&T/BellSouth will provide an ADSL modem without charge (except for shipping and handling) to residential subscribers within the wireline buildout area, who during calendar year 2007, replace their AT&T/BellSouth dial-up Internet access service with AT&T/BellSouth's ADSL service and elect a term plan for their ADSL service of 12 months or greater.

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 at a speed up to 768kbps at a monthly rate of $10 per month (exclusive of taxes and regulatory fees).

Public Safety: AT&T/BellSouth will make several public safety concessions, including improving disaster response capabilities in BellSouth territory.

UNEs: AT&T/BellSouth will not seek any increase in state-approved rates for UNEs or collocations. The company will also recalculate the impairment threshold for competitors using its wire centers to exclude fiber-based collocation arrangements, entities that do not operate their own fiber but merely cross-connect, and special access lines.

Special Access: AT&T/BellSouth shall not increase the rates paid by existing customers of DS1 and DS3 local private line services.

AT&T/BellSouth shall not provide special access services to its wireline affiliates that are not available to other similarly situated special access customers on the same terms and conditions.

AT&T/BellSouth will not unreasonably discriminate in favor of its affiliates in establishing the terms and conditions for grooming special access facilities.

AT&T/BellSouth shall not increase the rates in its interstate tariffs, including contract tariffs, for special access services it provides in the AT&T/BellSouth region.

Wireless: AT&T/BellSouth shall initiate ten new trials of broadband Internet access service using 2.3 GHz or 2.5 GHz spectrum by the end of 2007. At least five of the trials will be in BellSouth territory.

Transit Service: The AT&T and BellSouth incumbent LECs will not increase the rates paid for their existing tandem transit service arrangements.

ADSL service: Within 12 months of the closing date, AT&T/BellSouth will offer in BellSouth territory ADSL service to ADSL-capable customers without requiring customers to purchase circuit-switched voice grade telephone service. AT&T/BellSouth will continue to offer this service for 30 months after the implementation date in each state.

AT&T/BellSouth will offer to ISPs, for their provision of broadband service, a wholesale ADSL transmission service that is functionally the same as the service AT&T offered within the AT&T in-region territory prior to the merger closing date.

Forbearance: AT&T/BellSouth will not seek a ruling through a forbearance petition altering the status of any facility currently offered as a loop or transport UNE.

In addition to these conditions, the companies have also discussed the other possible conditions relating to the repatriation of jobs that had been sent overseas, Internet backbone peering arrangements, network neutrality non-discrimination, and the impact of FCC forbearance decisions on any conditions that might be imposed.