AT&T and BellSouth entered into an acquisition agreement all the way back in March, 2006 for a total price of $67 billion; at the time, the merger was approved by the boards of both companies, but was expected to take up to a year to close. owing to needing approval from shareholders and regulatory agencies.
Although the U.S. Department of Justice approved the deal back in October, the Federal Communications Commission has twice cancelled plans to consider the acquisition due to a split amongst commissioners, some of whom are concerned the acquisition would reduce competition for communications services in the overall market. Competitors to both AT&T and BellSouth have lobbied the commission to block the deal.
To encourage the FCC to approve the merger, AT&T as preemptively expanded the set of concessions it’s willing to make. AT&T’s latest promises include a promise to maintain a “neutral network” which didn’t prioritize or downgrade service based on the “source, ownership, or destination” of the traffic crossing the network. The company also agreed to maintain the number of “settlement” Internet peering arrangements which exist on the date of the merger closing for a period of three years, meaning that telecommunications companies which peer with AT&T and BellSouth wouldn’t be in immediate danger of losing customers. AT&T also offered that if any of the ten largest peering partners shut down during the three year period, it would replace that peering arrangement with a similar agreement rather than taking over the service itself.
AT&T’s concessions are notable for echoing concerns over “net neutrality,” that telecommunications providers will provide top-flight service for partners and their own services, while letting others languish on increasingly burdened networks (or even deliberately downgrading competitors’ services.)
Update 29-Dec-2006: A day after AT&T filed its additional concessions, the FCC has approved the company’s merger with BellSouth (PDF).