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October 09, 2006

FCC: AT&T Now Guards the Cheese

By Rich Tehrani, President and Editor-in-Chief

Many people think one of the best things the FCC (News - Alert) ever did was to put someone associated with COMPTEL (News - Alert) on the commission. In my conversations at every level of the telecom industry, executives tell me consistently they think the FCC and government do whatever the LECs—or more recently AT&T (News - Alert)—wants.
If you are a CLEC you have felt the pain of having the government deregulate telecommunications so you could compete only to find out less than ten years later—surprise—that you really can't compete and should go and find another thing to keep yourself busy. Oh, and the billions you invested in your business? You can just write it off. Have a nice day.
This is why many in the industry applauded the appointment of Robert McDowell onto the commission as he represented CLECs who were COMPTEL members and who petitioned to block the AT&T BellSouth (News - Alert) deal.
Many who make a living competing with LECs see excess consolidation as a very bad thing for the industry. They are hoping McDowell will level the playing field.
The timing of this “playing field leveling” is perfect, in fact, as this Thursday the FCC will have a vote potentially approving the $67-billion dollar AT&T BellSouth mega-merger.
But according to a recent article it has become apparent McDowell may not vote due to a conflict of interest relating to his activities at COMPTEL.
So it would seem that having McDowell on the commission may have the opposite result from what many thought. Instead of making it difficult to allow AT&T to get back together, in this case at least, McDowell may be the ace up the sleeve of the ILECs—or perhaps soon, to be more precise, AT&T.

It is possible, however, that when asked if anyone opposes this merger at the wedding ceremony, a few politicians could chime in. According to the Wall Street Journal a slew of politicians are writing the Justice Department and FCC asking for special conditions to be imposed if the merger is allowed. In addition, other well known people of influence such as Elliot Spitzer are saying there has not been an increase in competition due to the mergers of Verizon (News - Alert) Communications and MCI or SBC Communications and AT&T.
Kevin Martin, the Chairman of the FCC, has spoken candidly before saying he feels there is enough competition as wireless, cable and other forms of communications ensure consumers have a multitude of choices. But one wonders if having a few behemoth companies controlling a market as important as communications doesn’t give these giants a tremendous advantage on the lobbying and investment front.
After all Sens. Mike DeWine and Sen. Herb Kohl, the chairman and ranking Democrat on the Judiciary Committee's antitrust subcommittee, wrote asking the Justice Department and the FCC to consider imposing conditions on the merger to prevent the new AT&T from hoarding the wireless spectrum it controls, thus keeping it out of the hands of competitors.
These are valid concerns. If the government continues to allow these mega-mergers to occur won't they continuously have to police the activities of these massive entities and ensure they are allowing competition to flourish?
But let's think about this for a moment. If it is so easy for a larger AT&T to block competitors out of the market by hoarding spectrum, doesn't AT&T also have an obligation to its shareholders to make this happen? By allowing the phone company to grow to its former glory, the FCC will always have to stand watch over it and in many cases could be too late to pick up the pieces of smaller competitors who have been squeezed out of a variety of markets.
It seems apparent that many in the government are beginning to publicly state that mega-mergers aren’t helping consumers—and that giving too much control to a single massive telecom company may be like putting the mouse in charge of the cheese.
The AT&T-BellSouth merger is all about IP Multimedia Subsystems. To find out more about IMS and how it represents the lifeblood for service providers today, be sure to visit the IMS Expo -- a must-attend event, collocated at INTERNET TELEPHONY Conference & Expo, WEST, which runs October 10-13, 2006, in San Diego.
Rich Tehrani is President and Group Editor in Chief at TMC. In addition he is the Chairman of the world’s best attended VoIP event, Internet Telephony Conference & Expo.

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