Opponents See Wireless Broadband Suffering Under AT&T- BellSouth Merger

AT&T and BellSouth have been “warehousing” 2.3 GHz spectrum, which can be used for wireless broadband, and BellSouth is one of the largest licensees of 2.5 GHz, also suited for broadband, said Andrew Schwartzman of the Media Access Project at the call-in news conference Tues. If the companies merge, they'll have less incentive to use the spectrum for a wireless alternative to their more dominant wireline broadband service, he said. “This is spectrum well- suited for wireless Internet broadband service [and] offers great opportunity for bringing broadband service to the public,” Schwartzman said. “There’s no dearth” of potential buyers if the spectrum were divested, he said.

“This merger will hurt… the development of intermodal competition” by discouraging the use of the wireless spectrum, said Jonathan Rubin of the American Antitrust Institute. Rubin said Wireless Communications Services (WCS) at 2.3 GHz and both Broadband Radio Service (BRS) and Educational Broadband Service (EBS) at 2.5 GHz “are being actively considered for use for Wi-Max IP access.” BellSouth is a significant licensee of spectrum in the BRS and WCS bands and AT&T control of this spectrum could prevent other operators from developing “Wi-Max IP access distribution in the southeast U.S., and thus frustrate a national footprint,” Rubin said.

Schwartzman and Rubin were among representatives of 6 consumer and industry groups who spoke at the news conference to explain why they wanted the merger denied or at least conditioned to ease the alleged anticompetitive impact.

Although the divested spectrum would be “valuable for wireless broadband,” there could be an offsetting factor for potential buyers -- they would need assurance that backhaul prices wouldn’t rise as a result of the merger, said Jonathan Lee of CompTel, another press conference participant. “Telecommunications goes through the air only until it reaches an antenna” at which point the carrier must pay special access rates to wireline providers, often the Bells, he said. Lee said CompTel is concerned those rates would rise if the merger made the market more concentrated. “A single owner has no incentive to keep special access prices moderated,” he said.

Free Press Communications Dir. Craig Aaron said 15,000 individuals filed comments at the FCC to express concerns about the merger. “We're hoping the FCC will listen to the American people instead of high-priced lobbyists,” he said. “These tens of thousands of people are simply saying that enough is enough… These companies are big enough, they already have enough power.”

On the other hand, the Alliance for Public Technology (APT) told the FCC the merger would result in “more rapid roll out of advanced wireless services, accelerated deployment of multichannel video programming in BellSouth service areas [and] more efficient introduction of innovative new wireline and wireless products and services.” APT, a citizens group that supports the development of broadband services, said integrating AT&T and BellSouth “will allow Cingular to be even more efficient and innovative.” Cingular is now co-owned by the 2 companies.

Since the firms are said to have delivered customer call data to the NSA, the FCC should not approve the merger until it investigates those charges, the ACLU said in comments filed late Mon. Martin’s earlier nixing of the possibility of an inquiry prompted an ACLU letter. If the allegations are true, AT&T and BellSouth violated the Communications Act and the FCC rules implementing it, the group said. Noting BellSouth has “emphatically denied” being in on the NSA program, in contrast to AT&T’s silence, the ACLU said: “It would be a cruel irony if BellSouth had not participated in the program but as a result of this merger, BellSouth customers become unwilling surveillance targets.” AT&T’s silence is more alarming since it’s “the dominant partner in the proposed transaction,” ACLU said. The group doesn’t want “the FCC to investigate the NSA,” ACLU Technology & Liberty Project Dir. Barry Steinhardt said: “There is absolutely no reason why [the Commission] can’t find out whether the law was broken without revealing legitimate state secrets.”

A group of competitive telecom carriers told the FCC it shouldn’t approve the merger without attaching numerous conditions to assure access to network facilities and divest overlapping network assets. Among the conditions proposed: Continued access to AT&T-BellSouth special access services at rates capped at current levels and divestiture of AT&T’s metropolitan network assets in BellSouth territory. Like others, the group also suggested divesting BellSouth’s 2.5 GHz licenses. The companies are Cbeyond Communications, Grande Communications, NuVox Communications, Supra Telecom, Talk America, XO Communications and Xspedius Communications.

XO Communications Senior Vp Heather Gold said the FCC should ask itself: “Are we going too far this time?” Gold said the merger would “concentrate even more market power in the new AT&T, which is quickly reassembling the old Bell System.”

The Ga. PSC said if the FCC approved the merger it should require the new company to “maintain network neutrality” and offer stand-alone DSL in BellSouth’s service territory.