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FCC Welcomes 'Ma Bell' Back

Phil Harvey
12/29/2006

Just one day after AT&T Inc. (NYSE: T) offered to observe the principles of network neutrality, in its own way, the Federal Communications Commission (FCC) approved AT&T's proposed buyout of BellSouth Corp. (NYSE: BLS) (See AT&T Embraces (Some) Net Neutrality and AT&T, BellSouth Merge.)

Now AT&T, once broken up by the U.S. government because it was deemed a monopoly, has successfully put several of its old pieces back together in what is the largest U.S. telecom merger in history. These days, the FCC says a company with AT&T's size and scope promotes more competition in the enterprise, video, phone, and broadband Internet markets.

As part of the deal, stockholders of BellSouth will get 1.325 shares of AT&T common stock for each common share of BellSouth. Based on AT&T's closing stock price on Thursday, Dec. 28, 2006, this exchange ratio equaled $47.04 per BellSouth common share. Since the merger was announced, the market price of AT&T shares has jumped more than 26 percent and BellSouth's shares have climbed more than 48 percent.

The FCC's blessing was the last regulatory hurdle remaining for the two carriers to combine. The agency was previously deadlocked on whether the merger was a good idea. Now, the FCC's loudest voices, Chairman Kevin Martin and Commissioner Deborah Tate, said, "the Commission finds that this merger will further many of its broadband, competition, and public safety priorities and finds that the merger, on balance, will serve the public interest," in a joint statement released Friday afternoon.

The buyout, now valued at about $86 billion, was announced nine months ago. (See Ma Bell Is Back!) The combined company will still have its corporate headquarters in San Antonio and most of its executive management will come from the AT&T side.

— Phil Harvey, News Editor, Light Reading

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Mark Sullivan
Mark Sullivan
12/5/2012 | 3:17:05 PM
re: FCC Welcomes 'Ma Bell' Back
Shortly after AT&T agreed to abide by net neutrality principals as a condition of its BellSouth merger, a New York Times editorial defined those principles like this:

"Internet users now get access to any Web site on an equal basis. Foreign and domestic sites, big corporate home pages and little-guy blogs all show up on a userGÇÖs screen in the same way when their addresses are typed into a browser. Anyone who puts up a Web page can broadcast it to the world.

"Cable and telephone companies are talking, however, about creating a two-tiered Internet with a fast lane and a slow lane. Companies that pay hefty fees would have their Web pages delivered to Internet users in the current speedy fashion. Companies and individuals that do not would be relegated to the slow lane.

"Creating these sorts of tiers would destroy the democratic quality of the Internet. Big, wealthy voices would start to overpower the smaller, poorer ones. Innovation would be threatened if start-ups and small companies could not afford the new fees. The next eBay or Google might never be born."

Agree?
skinbop
skinbop
12/5/2012 | 3:31:24 AM
re: FCC Welcomes 'Ma Bell' Back
So how do readers see things panning out over the next six months?
45rpm
45rpm
12/5/2012 | 3:31:21 AM
re: FCC Welcomes 'Ma Bell' Back
People will discover the underhanded agreement that AT&T signed off to make the deal acceptable to FCC. They will have two networks of which only one complies with the Net Neutrality restrictions. And that net will die off like a twisted pair producing revenues without investment.
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