AT&T, BellSouth finally wed

AT&T and BellSouth logos

BOB MOON: The year's nearly over, but there was still time to wrap up one of the big merger deals of 2006. It's worth $85 billion. And it just received a final nod from the Federal Communications Commission. Today AT&T got the go ahead to buy rival BellSouth. But as Marketplace's Amy Scott reports, it didn't come cheap.


AMY SCOTT: Advocates of a free and fair Internet are claiming a victory today. AT&T says it will take steps to preserve so-called "net neutrality." Mark Cooper with the Consumer Federation of America has been involved in the FCC negotiations. He says for two years, AT&T agrees to treat all broadband customers and content equally.
MARK COOPER: They will not degrade, prioritize, or privilege that traffic. They will not sell services that do so. And so that is what preserves the consumer getting exactly what they want without the phone company getting in the way.

AT&T offered other consumer and labor-friendly concessions. It agreed to sell stand-alone, high-speed internet service for just 19.95 a month. It also pledged to bring back 3,000 jobs BellSouth had sent overseas. At least 200 of them would relocate to New Orleans.

Scott Wallsten studies communications policy at the Progress and Freedom Foundation. That's a think tank funded by AT&T and other telecom companies. Wallsten has a problem with the concessions. He says the FCC has overstepped its mandate.

SCOTT WALLSTEN: The purpose of reviewing mergers, and it's an important purpose, is to make sure that it doesn't create anticompetitive conditions and ultimately harm consumers. It's not supposed to be a way to extract concessions from companies.

Consumer advocates say they'd prefer congressional reform that would apply to all companies. They'll likely push for it again when AT&T's two-year promise expires.

In New York, I'm Amy Scott for Marketplace.

About the author

Amy Scott is Marketplace’s education correspondent covering the K-12 and higher education beats, as well as general business and economic stories.

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