The concessions that AT&T Inc. made to win regulatory approval of its mammoth merger with BellSouth Corp. have many important implications for consumers, beyond simply net neutrality.
With the Dec. 29 approval of the plan by the Federal Communications Commission, here’s what consumers can expect in the combined company’s service areas in 22 states:
” DSL service to new customers for $10 a month, for 30 months. This looks like a good deal for high-speed internet service, because it’s even cheaper than the cheapest plan AT&T now has, at $15 a month. It’s even better in BellSouth’s territory, where the company has kept prices higher than other phone companies: BellSouth’s cheapest plan is now $25 a month. AT&T is likely to lose money on this offer, because current DSL plans are not cash cows. However, to be eligible, you must never have had AT&T or BellSouth DSL, and you need local phone service.
“A 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). AT&T is currently offering a mail-in rebate that covers the cost of a DSL modem.
” A pledge to offer broadband service 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 still might not get DSL service. AT&T already sells satellite broadband through a partnership with WildBlue Communications Inc. Service starts at $50 a month for downloads at up to 512 kilobits per second, slower than AT&T’s $15 DSL plan. The equipment costs $300. One emerging alternative: fixed wireless broadband, which is cheaper than satellite but is only available in a few areas so far.
” DSL service without local phone service. This is something consumer advocates have fought for, because many broadband users make phone calls over that connection and feel no need for a traditional landline. But so-called “naked” DSL is something that appeals mostly to the technically sophisticated, and they’re unlikely to be thrilled by the relatively slow plan that 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. After that, there’s a good chance AT&T won’t make any new demands of current customers, but there’s no promise.
” 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. BellSouth already uses this spectrum to provide broadband service in parts of 15 cities in eight states. The technology is similar to that used in Wi-Fi hotspots, but it allows for longer range.
Cell-phone carrier Sprint Nextel Corp. has announced plans to build a competing wireless network and would love to get its hands on the frequencies to be surrendered by BellSouth. But there’s nothing in AT&T’s offer that says it has to sell the frequencies in an open process, so it might well chose a less-threatening buyer.