Friday, October 13, 2006

Mega-Merger vs. Internet Freedom

Earlier this week, the Justice Department went AWOL on protecting a free and open Internet for tens of millions of Americans. Now it's left to three men and one woman at the Federal Communications Commission to approve or scuttle the proposed AT&T-BellSouth merger.

At issue is whether the AT&T colossus should be allowed to gobble up the nation's third-largest phone company in its relentless march to re-assemble the Ma Bell monopoly. But the stakes are much higher today than when – prior to its 1984 antitrust break up – just one phone monopoly ruled the nation's copper wires and rotary phones.

Big Ed
In 2006, AT&T is poised to control all electronic media – not just telephones, but TV, music and the Web – that will enter homes via its same Internet "tube." The corporate giant – led by monopolist-in-chief Ed Whitacre – sees Net Neutrality as a major obstacle to this multibillion-dollar scheme. Without Net Neutrality, he’s free to toss the open, egalitarian Internet out the window.

A Bigger AT&T Is Bad for the Net

On Wednesday, the Justice Department stunned public interest advocates by green-lighting Whitacre's massive deal without any conditions or judicial review. The FCC as early as today could give a final approval. FCC Chair Kevin Martin has already indicated his willingness to follow the DoJ's lead and rubber stamp the $78 billion deal without protecting Internet freedom.

In Martin's view, the proposed merger does not raise a significant threat to Internet choice or Net Neutrality. Regrettably, this view ignores the enormous market power that a new AT&T would wield. The merged entity would become the principal – in most cases only – DSL provider in 23 states.

Martin has also ignored prior statements by executives of both companies. In interviews with the Financial Times, Washington Post and Business Week, Whitacre and BellSouth executives have outlined plans to consolidate their control over the Internet by erecting new online toll booths and discriminating against Web sites that don't pay their "special service" fees.

"There’s no bigger interest to the public than maintaining a free and open Internet," writes Art Brodsky of Public Knowledge. "But, like the Justice Department, the FCC is preparing to take a dive on the issue of Net Neutrality."

Deadlocked at the FCC?

But there is a growing glimmer of hope. Since Wednesday, when the DoJ passed on the deal, more than 20,000 Free Press and activists have sent letters asking for a Net Neutrality condition to be placed on the merger. Two of the four commissioners who will vote, Democrats Michael Copps and Jonathan Adelstein, have indicated that they will support this as part of any merger. But they still need strong public support to prevail.

The fourth, Republican Deborah Tate of Tennessee, is expected to follow Martin's lead – deadlocking the FCC at 2-2.

According to Harold Feld of Media Access Project, the only way to break the tie would be for Martin to force a fifth commissioner, Robert McDowell, to "un-recuse" himself from the process. McDowell had backed away from involvement due to a conflict of interest from his prior work for phone companies trying to compete with AT&T.

"The FCC General Counsel has the authority to declare McDowell's recusal invalid if the public interest in resolving the merger application outweighs any appearance of impropriety," Feld says. "Such a move would be extraordinary, however. To the best of my knowledge, it has never happened."

It's up to the FCC to step in where the Justice Department fears to tread; to put away rubber stamps and 11th-hour maneuvers and serve the interests of a free and open Internet and the millions of Americans who use it.

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