AT&T buyout of BellSouth OK'd

Regulators finally signed off on AT&T's merger with BellSouth. Concessions AT&T made to win that approval have many consumer implications.

BY PETER SVENSSON

Associated Press

The Federal Communications Commission unanimously approved AT&T's $86 billion buyout of BellSouth Friday, the day after the company offered a new slate of concessions for consumers and competitors.

With the approval, here's what consumers can expect in the combined company's service areas in 22 states:

• DSL to new customers for $10 a month, for 30 months. This looks like a good deal for high-speed Internet, as the Digital Subscriber Line is even cheaper than the cheapest plan AT&T now has, at $15 a month. BellSouth's cheapest plan is now $25 a month. However, to be eligible, you must never have had AT&T or BellSouth DSL and you need local phone service.

• Free broadband modem to those who replace AT&T or BellSouth dial-up services with DSL. This is not a major benefit, and there's nothing to prevent AT&T from recouping the cost by raising general prices (except on the mandated $10 plan).

• A pledge to offer broadband wherever the new AT&T is the local phone company. This sounds good, but AT&T is allowed to use satellite broadband, which is comparatively slow and expensive, to cover the last 15 percent of homes. This means rural homes that are too far from phone-switching stations may still not get DSL.

• DSL service without local phone service. Consumer advocates have fought for this because many broadband users make phone calls over that connection and feel no need for a traditional landline. But the technically sophisticated are unlikely to be thrilled by the relatively slow plan AT&T has offered to sell, with a download speed of 768 kilobits per second.

At $20 a month or less, it'll cost a bit more than the cheapest DSL plans but you can drop charges for phone services. This pledge will be good for 30 months.

• A pledge to sell wireless broadband licenses held by BellSouth. This is intended to open up competition in providing broadband to the home, a market that now has only two main competitors in each area: the phone company and the cable company.

Cellphone carrier Sprint Nextel has announced plans to build a competing wireless network and would probably love to get its hands on the frequencies to be surrendered by BellSouth. But AT&T may well chose a less-threatening buyer.

• A pledge to uphold ''net neutrality'' principles. This is the most abstract promise, but some consumer groups say it's the most important. The major phone companies -- most prominently AT&T -- have suggested they would like to be able to charge large Web companies like Google and Amazon for preferential treatment of their traffic, ensuring that, for instance, online movies they sell don't stutter or break up because of Internet traffic jams.

In a sometimes vehement debate over the past year, the Web companies and consumer advocates have fought this idea, saying it runs counter to the egalitarian and public nature of the Internet and will stifle innovation from smaller companies that can't afford the extra tolls.