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FCC Yields on Net Neutrality, For Now

Steven Titch
January 1, 2007, 6:39pm

Democrats extracted their pound of flesh from the FCC and AT&T, forcing AT&T to agree to two years of price controls and regulation of quality and management services they can offer big bandwidth users such as Google and Yahoo. AT&T is now free to complete its purchase of BellSouth, but this shameful episode at the FCC highlights the way the merger approval in telecom has gotten out of control. At one time, the Federal Trade Commission and the U.S Justice Department had jurisdiction. When these agencies demanded concessions, they usually had to do with ownership and market share. Often divestiture or spin-offs would be required, but there was always a test: would the consolidation lead to market domination. With AT&T and BellSouth, the market domination issue was dismissed early. The merger was approved by all state commissions in BellSouth's territory, as well as Justice and the FTC. If these had been two other companies, the deal would have been done then and there. Instead, opponents saw the 2-2 party deadlock at the FCC as an opportunity to launch round-after-round of partisan horse-trading over issues that had little or nothing to do with the merger's effect on consumers. These had to do with the number of union employees, rate caps on certain high-bandwidth services and the regulatory demand du jour–network neutrality. A casual observer couldn't be blamed for wondering that, if network neutrality is so important to the protection of the Internet, why did the FCC Democrats agree to exempt AT&T's wireless and video operations? To me that's a quiet admission that there are certain areas where transmission prioritization is required for applications to work properly and where content partnerships are good for consumers. Then there's the hedge of a two-year expiration date for wireline Internet neutrality, a nice regulatory back door in case bandwidth hogging by the studios, the gaming companies and the big applications players becomes enough of a problem that quality tiering is indeed required to "save the Internet"–for the rest of us who just want to get an email through! In fact, with broadband now accelerating due to greater competition, 24 months from now just might be the time we see Internet congestion issues creating demand for the Web prioritization. From this perspective, the concession agreement confirms serious misgivings on the part of regulators as to wisdom of net neutrality.


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