When the FCC allowed AT&T to acquire BellSouth in one of the largest telecom deals ever, the agency enacted a series of wimpy conditions
(pdf). Not only were most of the conditions simply for show, but the FCC made it very clear they really had no intention of enforcing them
. AT&T was supposed to offer naked or 768kbps $10 DSL for two years after the merger, but skirted around the condition's purpose by never advertising the services
, and making it difficult to order them
until people really started complaining. The FCC napped.
AT&T denied obfuscation and tried to claim that nobody really wanted dirt cheap unbundled DSL service anyway
. Worse perhaps than the weak and unenforced conditions were the meaningless conditions the FCC knowingly signed off on. Designed more for showmanship than substance, several conditions made consumer advocates, an unskeptical press and inattentive politicians from both parties feel good -- but accomplished virtually nothing.
One such condition had AT&T promising the FCC they'd deploy broadband to 100% of their 23-state legacy footprint. That sounds good until you realize AT&T fiddled with definitions
to include resold satellite in that equation. By that fairly insulting definition, AT&T offered broadband to 100% of their legacy customers before
the ink was even dry on the FCC approval. That's not a condition, it's a bad joke.
Increasing from 87% to 90% in three years is less than I believe most companies would do in the ordinary course of upgrading networks.
Which brings us to 2009, and a new FCC supposedly dedicated to broadband reform and penetration. According to a report in the Wall Street Journal
, the agency's been looking over Embarq and Centurytel's proposed $11.4 billion merger. The deal would create a new company named CenturyLink. CenturyLink would service 7.5 million access lines, more than two million broadband customers and more than 400,000 video subscribers across thirty three states.
Given the FCC's self-professed renewed focus on increased broadband penetration, it would seem like a good opportunity to light a fire under the carrier to deliver DSL services to phone customers who don't yet have it. But all indications are the FCC is rushing the deal's approval to meet the company's timeline before new boss Julius Genachowski gets appointed. Here's the fairly wimpy conditions the FCC appears poised to sign off on:
•Deliver DSL of at least 768kbps to 90% of broadband customers within three years.
•Deliver DSL of at least 1.5Mbps to 87% of customers in that same time frame.
•Deliver DSL of at least 3Mbps to 75% of customers one year from close, increasing that to 80% of customers within three years
Digging into the numbers indicates that yet again -- the FCC is greenlighting a deal where the conditions are little more than window dressing. According to long-time industry watcher Dave Burstein, the FCC "really blew it" on the deal, given that CenturyTel already says they're at 87% broadband coverage.
"Increasing from 87% to 90% in three years is less than I believe most companies would do in the ordinary course of upgrading networks," says Burstein, "and far less than the previous business plan of the companies," he adds. ADSL was originally designed to go 18,000 feet, and Burstein says the telco rarely sells lines over 15,000 feet. "That means the vast majority of that 87% can already get the 1.5 Mbps speed," he notes.
In addition to meaningless conditions that requires no extra effort to deploy DSL to existing Century or Embarq phone customers, the FCC isn't requiring any additional expansion, either. Buried in the deal's language is this: "nothing in this commitment shall require any CenturyTel or Embarq local operating company to serve any geographic areas it currently does not serve with Broadband ADSL Transmission Service."
Are the FCC's current lawyers really that poor at their jobs that they repeatedly allow meaningless conditions to float through unnoticed? At some point one has to assume that this isn't poor judgment or error on the part of an over-worked FCC -- it's willful participation in a sham, with American consumers playing the starring role.
CenturyTel's plan architect and lawyer Sam Feder was, until recently, FCC General Counsel. The drawbacks for consumers of a revolving door policy between regulators and telecom lobbyists/lawyers is as apparent as ever. This was an opportunity for the FCC to impose meaningful conditions that ensure consolidation benefits consumers. Instead, as with AT&T, the FCC once again decided that fealty to carriers was the top priority.
Requests for comment from several FCC staffers were not returned.