AT&T Merger Contains First Net Neutrality Guidelines

The merger agreement contains an unprecedented network neutrality provision that could form the basis of future policy and regulations, according to a Columbia University law professor.

January 3, 2007

6 Min Read
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The AT&T/BellSouth merger agreement contains an unprecedented network neutrality provision that could form the basis of future policy and regulations, according to a Columbia University law professor.

The language in AT&T's commitment to the Federal Communications Commission marks a significant step forward in defining the issue, according to Timothy Wu, a law professor specializing in technology and telecommunications.

"As the first working rule, it may serve as a model and an experiment for what follows, which is why it merits attention," Wu, co-author of Who Controls the Internet? (Oxford University Press, 2006) and a charter member of, wrote in his analysis. "At a level of theory, the language in the agreement is premised on a belief in the merits of a neutral network, and in particular its cultural, political, and economic benefits. The preservation of an open communications network as a catalyst for these sectors, without unfairly restricting AT&T's business, appears to be the motivating force behind the agreed-upon language."

Proponents of network neutrality pushed last year for legislation that would guarantee that telecommunications and cable companies would treat Internet data equally, regardless of its source. In other words, data from bloggers and individuals would move just as quickly as data from major corporations, allowing users to access content just as easily from one source as another. Though bills to that effect failed, the issue managed to tie up an overhaul of federal telecommunications laws.

Critics of network neutrality argue that the Internet should be an unregulated free marketplace. They joined forces through a group called Hands Off The Internet, which included AT&T and BellSouth. The group argued that, by charging some companies more for an "Internet fast lane," providers could raise money needed to expand and upgrade services. It pointed out that neutrality proponents include major Internet companies like Google, which benefit from the current system. Hands Off The Internet, backed in part by technology hardware companies, ceased to publicize new developments after Congress recessed in late October.In the meantime, drew mentions during political campaigns, support from famous musicians, and content contributions from Internet users. It has gained nearly 1.4 million signatures in favor of network neutrality and distributed public messages through video, blogs, and e-mail. The group argues that if the government fails to regulate the Internet, Web content would go the way of television and radio, with a few companies controlling most of the user experience.

"Despite any agreements in recent merger reviews, the facts are clear that broad-based net neutrality regulations aren't warranted," Chris Wolf, co-chairman of Hands Off the Internet, said Tuesday. "Important voices across the political spectrum have concluded that regulation of the Internet is unnecessary and would result in a whole host of unintended consequences. Net neutrality regulations would only benefit a few powerful companies at a tremendous cost to consumers and would impede the important goal of greater broadband adoption." He called proposed regulations "a problem in search of a solution," since the FCC and the Federal Trade Commission have authority over Internet access.

In a Dec. 28 letter to the FCC, the company offered more concessions for speedy merger approval, said Robert Quinn, AT&T's senior VP for federal regulatory affairs.

"In the face of these continuing demands, the merger has yet to be approved," Quinn wrote. "Accordingly, in order to break the impasse, and in the interest of facilitating the speediest possible approval of the merger by the commission, applicants agree to the attached merger commitments."

The company agreed to repatriate jobs; continue providing the same level of support in operating the core, or backbone, of the Internet; and maintain a neutral network and neutral routing in its wireline broadband Internet access service. The agreement will last for two years or until Congress passes legislation on network neutrality."This commitment shall be satisfied by AT&T/BellSouth's agreement not to provide or to sell to Internet content, application, or service providers, including those affiliated with AT&T/BellSouth, any service that privileges, degrades, or prioritizes any packet transmitted over AT&T/BellSouth's wireline broadband Internet access service based on its source, ownership, or destination," the merger agreement stated.

The commitment applies to "AT&T/BellSouth's wireline broadband Internet access service from the network side of the customer premise equipment up to and including the Internet exchange point closest to the customer's premise, defined as the point of interconnection that is logically, temporally, or physically closest to the customer's premise where public or private Internet backbone networks freely exchange Internet packets."

Wu pointed out that the agreement didn't address some important issues, especially the convergence of wireless technology and Internet use.

"The big unanswered question is network neutrality in the wireless world," he said during an interview Tuesday. "Everyone knows it's there. That's the elephant in the room. What's going to happen when net neutrality principles meet the cell phone world and the wireless world? There's a very managed, walled-garden approach now in the wireless world. There is a huge difference between those two types of networks [wireless and Internet], and this year they're going to be colliding."

Wu said that the agreement contains several critical components, including an anti-discrimination rule, a statement of scope, exclusion, and duration. In his analysis, he pointed out that the agreement does allow providers to speed video traffic, but not according to who offers the content."In short, AT&T must treat like traffic alike -- that is the essence of the agreement," he said.

The agreement excludes enterprise managed IP services and IPTV, which means the company can still give more bandwidth to enterprise servers during major events and compete with cable television services, Wu said. The agreement limits the exceptions, which should prevent any mischief or violations of the network neutrality requirements, Wu said.

"The two-year framework should provide time to assess the impact of the rule, and consider its extension to other carriers or a broader array of wireless networks," Wu said in his analysis. "One possibility is that AT&T will, in time, find the rule to its liking, as it provides a corporate pre-commitment against ill-advised 'value-added' schemes that may prove financially disastrous."

In the meantime, Congress is expected to tackle the issue, and proponents of network neutrality have kicked off a campaign for legislative action in a "Broadband Bill of Rights" in 2007. Their goal is to collect 2 million signatures on petitions and log 75,000 calls to Congress.

Their current tally is 52,887 calls to Congress, and a recently released retro video explaining their stance has received about 250,000 views in two weeks on YouTube. The group, which urges people to "use the Internet to save the Internet," reported nearly 22,000 signatures on requests to include the network neutrality agreement in any merger approval.0

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