FCC Chairman Wants to Break AT&T-BellSouth Lock

By Roy Mark

December 04, 2006

Kevin Martin makes moves to get a vote done.

Federal Communications Commission (FCC) Chairman Kevin Martin has ordered agency lawyers to determine if FCC Commissioner Robert McDowell can "unrecuse" himself from the AT&T-BellSouth merger vote.

If cleared to vote, McDowell, who holds one of the three Republican seats on the five-person panel, could possibly cast the tie-breaking vote to approve the merger that would create the world's largest telecommunications company.

McDowell recused himself from the merger vote to avoid the appearance of a conflict of interest. Prior to joining the FCC in June, McDowell was a lobbyist for CompTel, which opposes the merger. Without McDowell's vote, Martin and fellow Republican Deborah Taylor Tate, who support the merger, are deadlocked with Democrats Michael Copps and Jonathan Adelstein, who want, among other things, network neutrality provisions attached to the deal.

Because of the deadlock, Martin has delayed the vote three times over the last six weeks. The FCC is next scheduled to meet on Dec. 20. The merger has been pending at the FCC for eight months. "The Commission has reached an impasse," Martin wrote in a Friday letter to Congressional leaders. According to Martin, FCC regulations allow a recused commissioner to vote if the government's interest outweighs the appearance of a conflict of interest.

"The general counsel has, in the past, used this authority to authorize commissioners to participate in matters in which they would otherwise be recused," Martin wrote.

It is not immediately clear when the FCC general counsel will make a determination on McDowell. Even if allowed to vote, McDowell could abstain.

Martin's legal maneuvering to get the merger approved, drew the immediate ire of Public Knowledge, a Washington-based advocacy group. "Members of Congress should make clear that having Commissioner McDowell participate in the AT&T-BellSouth merger at this point would deeply compromise the integrity of the Commission," Public Knowledge President Gigi Sohn said in a statement. Sohn wrote that it would be "unseemly" to force McDowell to violate his ethical constraints.

"A better solution would be for Chairman Martin to reconsider his opposition to the pro-competitive and pro-consumer merger conditions being advocated by Commissioners Copps and Adelstein," Sohn said.

The Department of Justice approved the merger with no strings attached on Oct. 11. Martin also favors unconditional approval of the merger. However, with Martin hamstrung by McDowell's recusal, Copps and Adelstein have pushed for concessions. Just a day after Martin first delayed the vote, AT&T said it is willing to adhere to the FCC's network neutrality principles for 30 months after the official closing of its proposed merger with BellSouth.

In August 2005, the FCC declared that consumers are entitled to access the lawful Internet content of their choice, run applications and services of their choice and plug in and run legal devices of their choice.

The FCC also said consumers have a right to competition among network providers, application and service providers and content providers. What the FCC network neutrality principles do not address is the ability of broadband providers to charge content providers such as Google extra fees based on bandwidth consumption. Both AT&T and Verizon have announced broadband business models based on charging the extra fees to content providers. Copps and Adelstein want an additional FCC network neutrality principle that would ban the practice.

In addition to meeting the FCC's network neutrality principles, AT&T also pledged to offer standalone DSL for 30 months after the merger approval. AT&T also said it would it offer broadband to 100 percent of the living units in the AT&T-BellSouth market by January 2008. In order to promote adoption of broadband, AT&T will offer free modems throughout next year to residential customers who upgrade from dial-up service. For new Internet customers, AT&T proposes to offer broadband service at $10 a month for an unspecified time period.

The merger would make AT&T the world's largest telecommunications company with 70 million landline customers across 22 states. Currently a co-owner of Cingular Wireless with BellSouth, the deal would give AT&T full control of the nation's largest cellular company.

Combining the two companies' DSL broadband customers would give AT&T 9.1 million high-speed Internet customers, barely behind market leader Comcast's 9.3 subscribers.

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