Wedding Bells for the Behemoth Bells

Ma Bell continues to eat her young. In the closing hours of the last business day before the New Year's weekend, the FCC gave the go-ahead on AT&T's $86 billion takeover of Bellsouth. The deal folds together the country's largest national and regional wireline phoners as well as the largest cell outfit, Cingular Wireless. Cingular was a joint venture between the two entities before the merger.

Combined, the companies' revenues will fall somewhere between the CIA's estimated gross domestic product of Iraq and Mexico. Together, they will employ the population equivalent of Madison, Wis.

Cingular has about 59 million cell subscribers, had $34 billion in revenue in '05, and employed 70,000 people as of last year. Bellsouth raked in $20 billion in '05 and employs about 63,000 people; while the monster that is AT&T did pulled in $44 billion in '05 and employs more than 300,000 people. Thus, AT&T, the largest phone company on earth before the bell break-up in 1984, becomes the largest phone company on earth.

The nuptials were first announced last March and met with pitchforks and torches by consumer groups and antimonopolists. Just 15 months prior, SBC had swallowed AT&T for $16 billion and renamed itself AT&T. In the preceding decade, SBC had been Southwestern Bell and which acquired Pacific Telesis and Ameritech upon taking certain scout oaths before the FCC. The combined companies became SBC, which was later fined $6 million by the FCC for blowing its oaths.

This time around, the company that was AT&T then SBC then AT&T has oathed to bring 3,000 overseas jobs back to the United States; build broadband out in its entire territory by the end of 2007; offer 768 kbps of McBroadband for $10 for a 30-month period within six months after the merger closing date; and most important to the fork-and-torch crowd, abide by some basic tenants of network neutrality for two years.

Last year, AT&T Chief Executive Ed Whitacre said network neutrality was "nuts," but that was before the acquisition hit the Washington D.C. circuit of scrutiny.

The FCC approved the merger with a vote of four ayes and one abstaining. Commissioner Robert McDowell, a former phone lobbyist, remained recused from the vote, despite Chairman Kevin Martin's efforts to the contrary. The concessions, offered by AT&T on Dec. 28, were enough to sway the two Democrats on the commission.

AT&T's corporate headquarters will remain in San Antonio. The new AT&T Southeast (formerly BellSouth) and Cingular will continue to be based in Atlanta. On Tuesday, Jan. 9, AT&T will Webcast a keynote address given by Chief Financial Officer Rick Lindner at the Citigroup 17th Annual Entertainment, Media and Telecommunications Conference in Las Vegas at 3 p.m. ET.