Watch those pipes
THE JUSTICE DEPARTMENT was right last month to approve the merger of two powerhouse telephone companies, AT&T; Inc. and BellSouth Corp. Given the rapidly changing telecommunications landscape, the teaming up of so-called Baby Bells and long-distance carriers (don’t forget that AT&T; is also the former behemoth SBC Communications Inc.) is not as alarming a prospect as it would have been a decade ago.
But that is not to say that the brave new world of a fiercely competitive market of cable, wireless and power companies delivering services over high-speed data pipelines has put to rest all concerns about the potential for abuse on the part of still-dominant former monopolists. In this time of transition, federal regulators should still take steps to protect consumers and competitors.
The Federal Communications Commission, in its own review of the merger, is considering a number of sensible conditions.
One would bar the merged company from giving preferential treatment to selected Internet sites and applications, or imposing unreasonable costs on cable companies’ phone services.
AT&T; and BellSouth contend that these restrictions are solutions in search of a problem. The FCC should address the issues raised by the cable telephone issue promptly in a proceeding that will apply industrywide, not just to AT&T.;
But the so-called net neutrality concern is valid. There’s a chokepoint on the emerging stream of competition: the companies that provide high-speed connections to the Internet. More than 99% of high-speed homes get their connection from the local phone company (DSL lines) or cable TV operator (cable modems). In many areas, there’s only one of those options. It may take years before wireless companies, electric utilities and satellite firms can field a competitive offer. Top executives from AT&T; and BellSouth have been quoted as saying they expect popular websites such as Google and Yahoo to pay more “to use my pipes,” as AT&T; Chief Executive Ed Whitacre told Business Week last year.
That’s why the FCC should approve the AT&T-BellSouth; deal only with conditions that prohibit the merged company from imposing fees that discriminate unfairly against websites or services. These conditions should be lifted where new high-speed Internet services emerge to challenge the cable-telco duopoly. That day isn’t here yet, and the FCC shouldn’t pretend otherwise.
