TELECOM Digest OnLine - Sorted: FCC Chairman Wants to Break AT&T-Bell South Lock

FCC Chairman Wants to Break AT&T-Bell South Lock

Roy Mark (
Mon, 04 Dec 2006 14:18:35 -0600

By Roy Mark

Federal Communications Commission (FCC) Chairman Kevin Martin has
ordered agency lawyers to determine if FCC Commissioner Robert
McDowell can "unrecuse" himself from the AT&T-BellSouth merger vote.

If cleared to vote, McDowell, who holds one of the three Republican
seats on the five-person panel, could possibly cast the tie-breaking
vote to approve the merger that would create the world's largest
telecommunications company.

McDowell recused himself from the merger vote to avoid the appearance
of a conflict of interest. Prior to joining the FCC in June, McDowell
was a lobbyist for CompTel, which opposes the merger. Without
McDowell's vote, Martin and fellow Republican Deborah Taylor Tate, who
support the merger, are deadlocked with Democrats Michael Copps and
Jonathan Adelstein, who want, among other things, network neutrality
provisions attached to the deal.

Because of the deadlock, Martin has delayed the vote three times over
the last six weeks. The FCC is next scheduled to meet on Dec. 20. The
merger has been pending at the FCC for eight months. "The Commission
has reached an impasse," Martin wrote in a Friday letter to
Congressional leaders. According to Martin, FCC regulations allow a
recused commissioner to vote if the government's interest outweighs
the appearance of a conflict of interest.

"The general counsel has, in the past, used this authority to
authorize commissioners to participate in matters in which they would
otherwise be recused," Martin wrote.

It is not immediately clear when the FCC general counsel will make a
determination on McDowell. Even if allowed to vote, McDowell could

Martin's legal maneuvering to get the merger approved, drew the
immediate ire of Public Knowledge, a Washington-based advocacy group.
"Members of Congress should make clear that having Commissioner
McDowell participate in the AT&T-BellSouth merger at this point would
deeply compromise the integrity of the Commission," Public Knowledge
President Gigi Sohn said in a statement. Sohn wrote that it would be
"unseemly" to force McDowell to violate his ethical constraints.

"A better solution would be for Chairman Martin to reconsider his
opposition to the pro-competitive and pro-consumer merger conditions
being advocated by Commissioners Copps and Adelstein," Sohn said.

The Department of Justice approved the merger with no strings attached
on Oct. 11. Martin also favors unconditional approval of the merger.
However, with Martin hamstrung by McDowell's recusal, Copps and
Adelstein have pushed for concessions. Just a day after Martin first
delayed the vote, AT&T said it is willing to adhere to the FCC's
network neutrality principles for 30 months after the official closing
of its proposed merger with BellSouth.

In August 2005, the FCC declared that consumers are entitled to access
the lawful Internet content of their choice, run applications and
services of their choice and plug in and run legal devices of their

The FCC also said consumers have a right to competition among network
providers, application and service providers and content providers. What
the FCC network neutrality principles do not address is the ability of
broadband providers to charge content providers such as Google extra
fees based on bandwidth consumption. Both AT&T and Verizon have
announced broadband business models based on charging the extra fees to
content providers. Copps and Adelstein want an additional FCC network
neutrality principle that would ban the practice.

In addition to meeting the FCC's network neutrality principles, AT&T
also pledged to offer standalone DSL for 30 months after the merger
approval. AT&T also said it would it offer broadband to 100 percent of
the living units in the AT&T-BellSouth market by January 2008. In order
to promote adoption of broadband, AT&T will offer free modems throughout
next year to residential customers who upgrade from dial-up service. For
new Internet customers, AT&T proposes to offer broadband service at $10
a month for an unspecified time period.

The merger would make AT&T the world's largest telecommunications
company with 70 million landline customers across 22 states. Currently
a co-owner of Cingular Wireless with BellSouth, the deal would give
AT&T full control of the nation's largest cellular company.

Combining the two companies' DSL broadband customers would give AT&T
9.1 million high-speed Internet customers, barely behind market leader
Comcast's 9.3 subscribers.

Copyright 2006 Reuters

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