AT&T – BellSouth merger: Revestiture continues

03 Jan AT&T – BellSouth merger: Revestiture continues

The executives and lobbyists from AT&T and BellSouth must simply be on a mission from God because they are putting the band back together and no one can stop them.
They waited until the last week of the year to pull off the largest telecom merger in U.S. history. I always thought that the old Bell System was better as one big company. They are another step closer to proving I was right by continuing what I coined the “Revestiture of AT&T” in a column in May 2005:
http://www.midwestbusiness.com/news/viewnews.asp?newsletterID=11127&page=1
For all the noise generated by small Wi-Fi prophesies and shrill catalysts for change in the telecom and network industries, you still hear the clear booming sounds of Ma Bell’s old Victrola playing louder than anyone and setting the rhythms for regulation and rewrites. We have come about full circle with the telecom industry. Unfortunately, that means we are back where we started.
Well the Victrola played at the Federal Communications Commission again getting Bell South merged with AT&T. They now cover 22 states, about 300,000 employees and about 70 million subscribers.
Analysis paralysis on net neutrality
There is so much blog analysis on the recent approval of the AT&T-Bell South merger that the true issue has been overshadowed. This is not a Democratic or Republican victory or defeat, as some blogs have reported.
All of the fighters and crusaders for net neutrality better take a second look at what they really won because to me, it does not look like they really got much. Some of the analysts got it right by saying that AT&T did not give up much to get the merger approved. Parts of Jeff Pulver’s blog statement (http://pulverblog.pulver.com/archives/006164.html ) summed it up pretty succinctly:
I, however, do fear that, in the long run, AT&T might have given up nothing to the FCC, nothing to the Internet application providers, nothing to the users of the Internet and broadband networks.
AT&T’s 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.
In another perspective (http://blog.tomevslin.com/2006/12/att_gives_both_.html ), here’s why this concession is NOT sufficient to protect the public interest if this monopoly-enhancing merger is allowed:
• AT&T’s IPTV is exempted from the neutrality provision. It is the TV “pipes” that AT&T CEO Ed Whitacre thinks are his. Trouble is, there are no separate pipes on an IP network. AT&T has left itself full flexibility to favor its own Internet video offers over all challengers or to charge others a premium for equal treatment.
• Very carefully, the ACCESS network is defined as the part of the AT&T-supplied network between the customer premises and the nearest Internet peering point. But AT&T owns huge stretches of Internet BACKBONE (the part of the Internet between peering points); there is absolutely no promise of neutrality here.
• Even this very weak concession sunsets in two years rather than the three-and-half years AT&T has offered for their other “concessions.”
It would be a step backward if AT&T succeeds in having this definition of “net neutrality” become a standard.
Once they become a huge monopoly again, net neutrality will fade into insignificance like the Versailles treaty did after World War I.
Not a Democrat or Republican issue
If you are looking at the merger as a Republican victory or looking at the mention of adhering to some weak net neutrality verbiage as a Democratic victory, then you just don’t get it.
Having the best network infrastructure transcends any political party and is more of a national strategic importance. I think some of the self-proclaimed telecom/network analysts have missed this.
We have become too polarized and too simplistic on siding with some party and its views on every issue versus understanding that there are some things that are more important and should not be tagged with party affiliation.
Concessions should be given to AT&T if they, in return, are going to build and maintain the best infrastructure in the world. That is fair. And that was, in effect, what they had in the pre-Divestiture monopoly days. But those were simpler times because we were not talking about a convergence of voice, data, and video on one broadband line coming into your house. And, COMCAST was not around with an alternative approach and many third-world countries were not at a point of understanding that the network infrastructure of their country was a key component for global economic development.
Today, we are far behind some other countries’ network infrastructure deployments.
If AT&T isn’t going to make ours the best network, then they should not be given anything in concessions and let them die if the competition in the market overruns them. As one post on DSL Reports claimed:
Either build a robust network through and through or: GO OUT OF BUSINESS, get out of the way and let someone who is willing to build the network BUILD ALREADY!!!
Isn’t that capitalism? Does this merger get us any closer to building a superior infrastructure? Or, does it merely create a “circling of the wagons” for old incumbent telephone companies to hold their last stand on profitability from an obsolete infrastructure?
DSL: Damn the slow lines
Build the best or get out of the way. Is this sending the incumbents too strong a message?
Some people have asked me where I stand on this issue. It is very simple. I am for building the best network infrastructure as a platform that America can compete with globally for economic development.
If there is any rhetoric or lobbying that focuses on “we’ll do what we can with copper” or “this is the best we can do” and it’s a second-rate effort, then there should be no protective legislation or restrictive covenants that protect the incumbents.
And as for “naked DSL” or selling DSL without having to tie in phone service, I fail to see the great significance in that. Slow DSL is slow DSL whether you tie it with another service or not. Nothing was mentioned about getting really fast DSL or any data service out to consumers.
Some people’s mouths are watering because we are going to get 6Mbps in Project Lightspeed when other countries are looking at delivering 100Mbps in the same timeframe. We are behind.
DSL stands for Damn Slow Line when you compare it with fiber.
So who really won?
AT&T won. Even though some people for net neutrality are very passionate about their position as they fight AT&T, they do not understand who they are going up against, the prior regulations and guarantees set in the Telecom Act of 1996, and what resources the incumbents really have.
Some have made net neutrality sound like some type of modern-day Crusade. Some of these people thought they won some victory by seeing some concessions. Others, who were more astute, learned that they simply brought a knife to a gunfight.
No concessions of consequence were won but the bigger issue of insuring that a number one network will be built was never even put on the table.
CARLINI-ISM: Never underestimate an opponent, let them underestimate you.
Copyright 2007 – James Carlini
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