Approval of AT&T-BellSouth merger creates nation's largest video company

Once AT&T compromised on Net neutrality, the FCC gave a 4-0 approval to create the nation’s largest telco, an entity that will control half the nation’s phone and Internet access lines in the United States. If the plans of the new communications giant are successful, TV screens can be added to that statistic as well.

The FCC argued that the merger would benefit media consumers. Those benefits include deployment of broadband throughout the entire AT&T-BellSouth in-region territory during 2007 and increased competition in the market for advanced pay TV services because of AT&T’s ability to deploy IP-based video services more quickly than BellSouth.

According to the FCC, other benefits are improved wireless products, services and reliability because of the efficiencies gained by unified management of Cingular Wireless, which is now a joint venture operated by BellSouth and AT&T, and 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.

But, it was another major media consolidation, and only the compromise on the Net neutrality issue enabled the merger. Even the FCC warned that the compromise didn’t mean that the issue was resolved.

Among net neutrality supporters, there was disagreement about two exceptions in the deal, CNET reported. One exception allows AT&T to deliver “enterprise managed IP services.” These are services that telcos sell to business clients to connect different offices or provide Internet connections to data centers. AT&T charges its customers a premium for guaranteed levels of service, which requires the company to manage or prioritize traffic when it runs over its network.

Another exemption is for AT&T’s IPTV service, called U-verse, which is now operating in 11 markets. Because the IPTV service doesn’t run over the public Internet, this should not be a big issue, Tim Wu, a professor at Columbia Law School specializing in telecommunications law and a charter member of the coalition, told CNET.