WASHINGTON, March 6 — As head of the Federal Communications Commission during the Clinton administration, Reed E. Hundt killed talks about a possible merger in 1997 when he said that a proposed deal between AT&T and SBC would be "unthinkable" under antitrust laws.
Last year those two companies combined with little resistance. And on Monday Mr. Hundt said that AT&T's proposal to buy BellSouth for $67 billion was "eminently thinkable," and that if he were still at the commission, "I would bless the deal."
His statement was a sign of how far the regulatory climate, as well as the marketplace, has traveled in less than a decade, as the cable and phone industries have gotten into each other's businesses and new forms of phone service have grown.
While government officials and industry lobbyists say the AT&T-BellSouth deal faces few regulatory obstacles, those same changes in the marketplace may bring different political headwinds.
The deal threatens to undermine parts of the telephone industry's broader regulatory and legislative agenda by making it more difficult for the industry to claim it badly needs relief from regulators and Congress.
The Bell telephone companies have lobbied hard for the last year to get Congress to adopt a measure that would make it easier for them to offer video services. The phone companies want federal legislation that would pre-empt local authority over such services. (The cable industry has fought equally hard against the measure.) That fight is central to the telephone companies' new strategy of offering video service to compete head-on with cable and satellite companies that offer paid television services.
As Internet service providers, the large phone companies are meanwhile involved in a political fight over whether they must offer equal access to all Web providers, an approach called "Net neutrality." Content providers like Google and Yahoo, and companies providing Internet-based phone service like Vonage, seek legislation to prevent phone companies from favoring their own Web sites and those offered by their partners, over rivals and Internet phone companies.
While the phone companies fight that move, they are also battling legislative efforts to make it easier for municipalities to offer free wireless Internet services.
But the continued consolidation of the telephone industry that the latest deal contemplates gives the phone companies' opponents significant political leverage in all three debates — and for the time being, could make it harder for AT&T and Verizon, the two largest phone companies, to prevail on all fronts.
"The reverberations at first will be subterranean, but they will be of earthquake proportions," Mr. Hundt said.
The cable industry, awaiting regulatory approval of its own major consolidation in which Time Warner and Comcast expect to divide up Adelphia, was quick Monday to point out the perils of a consolidating telephone industry. But Verizon, signaling that it will not raise major objections to the BellSouth deal, issued a statement that called it "logical and predictable." And Kevin J. Martin, the chairman of the F.C.C., issued a noncommittal statement.
"The F.C.C.'s primary responsibility is to determine whether the proposed transaction is in the best interest of consumers," Mr. Martin said. "We will carefully weigh the information presented, examining any allegations of specific harm in individual markets and the potential benefits for the deployment of new services."
The agency will be considering what conditions to impose on the deal in a process that could take as long as a year.
The AT&T-BellSouth deal provides a vehicle for regulators and lawmakers to consider what to do in the "Net neutrality" debate and whether the telephone companies can charge more money for certain content providers. The issue came to national attention in November when Edward E. Whitacre Jr., the blunt-speaking leader of AT&T, complained in an interview in Business Week Online about the current state of affairs.
"We and the cable companies have made an investment, and for Google or Yahoo or Vonage or anybody to expect to use these pipes free is nuts," Mr. Whitacre said.
In the same interview, Mr. Whitacre was asked whether it was possible that his company would ever acquire BellSouth.
"It sure would be nice, but it doesn't have much chance of happening because of market power, size, etc.," he replied. "I think it would be real hard to do. I don't think the regulators would let that happen, in my judgment."
While AT&T seems to have overcome that concern, lobbyists and others in the industry said Monday that there would be pressure on regulators to impose conditions assuring that consumers continue to have unfettered access to the Internet, and precluding discrimination by AT&T against companies like Google and Yahoo.
Any new rules, however, might not prevent phone companies from offering a more expensive tier of service providing faster Internet access for the transfer of video and other large files.
In the case of the video-franchise legislation, the telephone companies in recent weeks had begun to see progress on favorable legislation in the House that could be derailed by the deal.
Wasting no time, the National Cable and Telecommunications Association, the cable industry lobbying and trade organization, sent a letter to top lawmakers on Monday arguing against legislation that would remove local control over the introduction of video services by the Bell companies.
The cable industry, having put together its franchises city by city, contends that the phone companies should face the same hurdles for video delivery.
"It is important to take stock of where we are in 2006," said the letter from Kyle McSlarrow, president and chief executive of the association. "In the last decade, the Bell monopolies have all but wiped out their telephone competitors; they have swallowed their long-distance competitors; and with the announcement of the AT&T-BellSouth merger, they are on the verge of recreating Ma Bell. And only one competitor really stands in their way: the cable industry."
http://www.nytimes.com/2006/03/07/politics/07policy.html?_r=1&oref=slogin
Last year those two companies combined with little resistance. And on Monday Mr. Hundt said that AT&T's proposal to buy BellSouth for $67 billion was "eminently thinkable," and that if he were still at the commission, "I would bless the deal."
His statement was a sign of how far the regulatory climate, as well as the marketplace, has traveled in less than a decade, as the cable and phone industries have gotten into each other's businesses and new forms of phone service have grown.
While government officials and industry lobbyists say the AT&T-BellSouth deal faces few regulatory obstacles, those same changes in the marketplace may bring different political headwinds.
The deal threatens to undermine parts of the telephone industry's broader regulatory and legislative agenda by making it more difficult for the industry to claim it badly needs relief from regulators and Congress.
The Bell telephone companies have lobbied hard for the last year to get Congress to adopt a measure that would make it easier for them to offer video services. The phone companies want federal legislation that would pre-empt local authority over such services. (The cable industry has fought equally hard against the measure.) That fight is central to the telephone companies' new strategy of offering video service to compete head-on with cable and satellite companies that offer paid television services.
As Internet service providers, the large phone companies are meanwhile involved in a political fight over whether they must offer equal access to all Web providers, an approach called "Net neutrality." Content providers like Google and Yahoo, and companies providing Internet-based phone service like Vonage, seek legislation to prevent phone companies from favoring their own Web sites and those offered by their partners, over rivals and Internet phone companies.
While the phone companies fight that move, they are also battling legislative efforts to make it easier for municipalities to offer free wireless Internet services.
But the continued consolidation of the telephone industry that the latest deal contemplates gives the phone companies' opponents significant political leverage in all three debates — and for the time being, could make it harder for AT&T and Verizon, the two largest phone companies, to prevail on all fronts.
"The reverberations at first will be subterranean, but they will be of earthquake proportions," Mr. Hundt said.
The cable industry, awaiting regulatory approval of its own major consolidation in which Time Warner and Comcast expect to divide up Adelphia, was quick Monday to point out the perils of a consolidating telephone industry. But Verizon, signaling that it will not raise major objections to the BellSouth deal, issued a statement that called it "logical and predictable." And Kevin J. Martin, the chairman of the F.C.C., issued a noncommittal statement.
"The F.C.C.'s primary responsibility is to determine whether the proposed transaction is in the best interest of consumers," Mr. Martin said. "We will carefully weigh the information presented, examining any allegations of specific harm in individual markets and the potential benefits for the deployment of new services."
The agency will be considering what conditions to impose on the deal in a process that could take as long as a year.
The AT&T-BellSouth deal provides a vehicle for regulators and lawmakers to consider what to do in the "Net neutrality" debate and whether the telephone companies can charge more money for certain content providers. The issue came to national attention in November when Edward E. Whitacre Jr., the blunt-speaking leader of AT&T, complained in an interview in Business Week Online about the current state of affairs.
"We and the cable companies have made an investment, and for Google or Yahoo or Vonage or anybody to expect to use these pipes free is nuts," Mr. Whitacre said.
In the same interview, Mr. Whitacre was asked whether it was possible that his company would ever acquire BellSouth.
"It sure would be nice, but it doesn't have much chance of happening because of market power, size, etc.," he replied. "I think it would be real hard to do. I don't think the regulators would let that happen, in my judgment."
While AT&T seems to have overcome that concern, lobbyists and others in the industry said Monday that there would be pressure on regulators to impose conditions assuring that consumers continue to have unfettered access to the Internet, and precluding discrimination by AT&T against companies like Google and Yahoo.
Any new rules, however, might not prevent phone companies from offering a more expensive tier of service providing faster Internet access for the transfer of video and other large files.
In the case of the video-franchise legislation, the telephone companies in recent weeks had begun to see progress on favorable legislation in the House that could be derailed by the deal.
Wasting no time, the National Cable and Telecommunications Association, the cable industry lobbying and trade organization, sent a letter to top lawmakers on Monday arguing against legislation that would remove local control over the introduction of video services by the Bell companies.
The cable industry, having put together its franchises city by city, contends that the phone companies should face the same hurdles for video delivery.
"It is important to take stock of where we are in 2006," said the letter from Kyle McSlarrow, president and chief executive of the association. "In the last decade, the Bell monopolies have all but wiped out their telephone competitors; they have swallowed their long-distance competitors; and with the announcement of the AT&T-BellSouth merger, they are on the verge of recreating Ma Bell. And only one competitor really stands in their way: the cable industry."
http://www.nytimes.com/2006/03/07/politics/07policy.html?_r=1&oref=slogin
