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AT&T Concedes to a Two-Year Net Neutrality

Associated Press reports that lawyers for AT&T Inc. and the government worked marathon hours to forge an agreement that would allow the company to complete its $85 billion purchase of BellSouth Corporation.

The proposed deal could lead to the largest telecommunications merger in U.S. history, and enable communications industry consolidation to mirror what has happened in the media sector. In both cases, the Federal Communications Commission (FCC) has been criticized by consumer groups for not protecting the public interest.

AT&T on Thursday night put forth what is expected to be its last and best offer, and it appeared it was 'good enough' to lead to a vote on the merger by the FCC as early as Friday. AT&T has offered concessions beyond what it had promised in October, including a significant pledge to observe standards regarding network neutrality -- basically, equal treatment for all Internet traffic.

AP reports that this issue appeared to be the biggest roadblock to a deal.

AT&T offered the concessions after a little more than a week of negotiations with lawyers who work for the commission's two Democrats, Michael Copps and Jonathan Adelstein, documents show. Consumer advocates praised the compromise.

Gene Kimmelman, vice president of federal and international affairs for Consumers Union, who has worked closely with the Democrats, said AT&T's new concessions are "an enormous improvement from where we were a month ago."

Ben Scott, legislative director for Free Press, a reform group that has fought the merger, said the network neutrality provision was a "big step forward for the supporters of an open Internet."

FCC Chairman Kevin Martin, a Republican, supported approval of the merger without any conditions. The U.S. Justice Department previously approved creation of the new telecommunications giant without conditions. Apparently, the consolidation isn't expected to limit market competition since incumbent telcos rarely compete with each other directly.

Among the promises made by AT&T:

- An offer of stand-alone, high-speed Internet service to customers in its service area for $19.95 per month for a total of 30 months. The 'naked DSL' offer would allow those who live in AT&T and BellSouth's service areas to sign up for Internet access without being forced to buy a package of other services.

- A greater commitment to network neutrality, or non-discrimination involving Internet traffic. AT&T said it would "maintain a neutral network and neutral routing in its wireline broadband Internet access service" for two years.

It's not yet clear if the FCC, by default, has essentially agreed to defer a permanent solution to the net neutrality issue beyond the two-year open Internet reprieve. The combination of San Antonio-based AT&T and Atlanta-based BellSouth would have operations in 22 states and more than half of the major U.S. telecom services markets.

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