Washington— AT&T's $85.8 billion merger with BellSouth sailed through the Justice Department and just about every other regulatory body that gave it a good scrubbing, both here and abroad.
But the same was not true at the Federal Communications Commission. The agency approved the deal Dec. 29 — after AT&T was forced to agree to a host of conditions, including one in which the company committed to provide nondiscriminatory treatment to Web-based providers of video, data and applications for a period of two years.
AT&T was backed into a corner because Republican FCC member Robert McDowell, who joined the agency on June 1, was legally barred from participating after his former employer filed comments with the FCC opposing the merger.
That left four voting members, Republicans Kevin Martin and Deborah Taylor Tate and Democrats Michael Copps and Jonathan Adelstein.
The two Democrats refused to support the deal unless they could extract net neutrality commitments from an AT&T that would have dominant presence in 22 states.
IN CONGRESS' COURT NOW
Net-neutrality proponents, such as Free Press and Public Knowledge, said the FCC merger conditions set the stage for congressional passage of net neutrality legislation before AT&T's two-year commitment expires.
“Two years is sufficient time for Congress to pass legislation,” said Free Press policy director Ben Scott. “We will certainly push for legislation in the Congress this year. It will embody the spirit and principle of what's in the merger condition.”
Public Knowledge communications director Art Brodsky said that by agreeing to net neutrality at the FCC, AT&T gave its proponents considerable leverage on Capitol Hill, especially among lawmakers who argued that net neutrality couldn't be defined in a way that made good law.
“[AT&T] created a different climate because you have a significant player in the industry agreeing to it,” Brodsky said. “It's right there: [AT&T] won't do these things.”
AT&T agreed to language that it would “maintain a neutral network and neutral routing in its wireline broadband Internet access service” and it wouldn't offer “any service that privileges, degrades or prioritizes any packet transmitted … based on source, ownership or destination.”
Last year, major telecommunications legislation died in the Senate over net neutrality because Web powerhouses such as Google, eBay and Yahoo complained that the bill lacked sufficient safeguards, including the language that AT&T just accepted in the BellSouth merger.
The Web players are hard at work on plans to build on their victory at the FCC.
“We look forward to working with Congress to enact legislation in  ensuring that all network operators similarly commit to guaranteeing consumers access to an open Internet free of discrimination,” said Jim McGann, a spokesman for the It's Our Net coalition, which includes Google, eBay and Yahoo.
NCTA OPPOSES CONCEPT
To pass legislation, net neutrality proponents would need to overcome fierce resistance from major cable operators and phone companies. Another hurdle: White House veto threats.
“We remain opposed to any regulation of the Internet,” said Brian Dietz, senior vice president of communications at the National Cable & Telecommunications Association.
For its part, AT&T refused to concede that it had to embrace net neutrality legislation in light of the concessions it made at the FCC.
“We continue to believe that net neutrality regulations are unwarranted and unwise,” said Jim Cicconi, AT&T senior executive vice president of external and legislative affairs.
“Decision-makers need to remain focused on what should be our national priority: Deploying more advanced broadband to more Americans more quickly. That is something that net neutrality regulations will only hinder,” Cicconi said.
The 110th Congress opened last Thursday with Democrats in control of the House and Senate for the first time in 12 year, but there is no indication that telecommunications policy is a near-term priority.
Medley Global Advisors telecommunications analyst Jessica Zufolo said the odds of a net neutrality law passing within two years were “pretty slim because the House leadership isn't interested in moving new telecommunications legislation that is contentious within the industry ranks.”