DSL Prime: AT&T's Net Neutrality Offer is Just Hot Air

AT&T promises to deliver bits without traffic shaping, but the agreement excludes the parts of the network it can control.

by Dave Burstein of DSL Prime and Future of TV [January 4, 2007]

"I call them the black ninjas. They work by night and are very, very good."
—FCC Chairman Bill Kennard explaining telco lobbyists

2:00 Friday—An incredible soap opera is playing in Washington, after AT&T published an offer late Thursday night full of great rhetoric and little substance. The $85 billion merger may or may not be approved any minute. Michael Copps yesterday told people he would vote for the deal and look for it today, but neither Copps nor Adelstein came to the office. They can do by e-mail, however. It's unlikely Copps, Adelstein and their staffers will read any of the comments before they vote, and the latest rumor is they voted last night and are just holding things to bury the story late Friday. So this is probably much ado about nothing, while maybe all the political pressure will get AT&T to behave after all.

Meanwhile I'm reporting the story based on the best public information, including the loophole D.C. folks tell me AT&T will not dare use. AT&T wants the deal, and if Copps and Adelstein stood firm would have given in. The market moves $5 billion or $6 billion on merger rumors—the total of all these concessions is less than a tenth of that. Whitacre would be a fool not to agree if pressed, and he's no fool. Here's the story, then the less political part of DSL Prime. I've worked all night, probably tilting at windmills, so forgive any rough edges please.

AT&T/BellSouth—In Progress with Results To Come
"Jim Cicconi and Bob Quinn are the best lobbyists in Washington," President of SBC Bill Daley lamented after they beat him a while back. They now work for AT&T, and have proven their brilliance by convincing most of D.C. they accepted network neutrality to get the BellSouth merger approved, while burying on page 10 a sentence that would allow AT&T to tie things up in court forever if Kevin Martin isn't strong.

AT&T offer on Net Neutrality sounds good, and might be a model to countries like Japan that are considering Net Neutrality rules. AT&T agreed "not to provide … 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."

A seemingly innocuous later sentence effectively makes that almost meaningless. "This commitment also does not apply to AT&T/BellSouth's Internet Protocol television (IPTV) service." AT&T has always intended to use what they are calling their "IPTV network" for the priority customers, and hasn't even put the QoS equipment in place on the 1998 "wireline broadband Internet access service." The entire set of "concessions" are not enough to change Merrill Lynch's "immaterial" judgment, unless the rhetoric about Net Neutrality becomes an important precedent. So let's fight for that.

Net Neutrality hero David Isenberg highlights: " We've come a long way, baby! Our lobbying helped convince FCC Commissioner McDowell to honor his ethics commitment and remain on the sidelines for the AT&T BellSouth vote. Then we got AT&T's Ed Whitacre to change his tune from, 'I'm not even sure what Net Neutrality means,'to AT&T/BellSouth will conduct business in a manner that comports with the principles set forth in the Commission's Policy Statement,'"

A moment is at hand where the Internet is winning more. Xavier Niel in France knows that, so do the Verizon fiber builders and the BT next gen network. (Policy, at end)

France's would be President comes to LeWeb3
Is this how history is made?
In Paris, I shot Nicholas Sarkozy from six feet away. The leading French Presidential candidate was so anxious to seem "Internet friendly" that he accepted a last-minute invitation to the LeWeb 3 conference without the usual security preparations. I was right next to the podium when I took a camera out of my pocket; if instead I had a gun history might have changed. That reminded me how unpredictable factors can exert a major influence, including in telecom.

For the record, I would be strongly opposed to Sarkozy if I were a French voter, but would not want him assassinated.

If Masayoshi Son at Yahoo BB didn't have the funding to take five million customers and scare NTT, Japan would not have six million fiber homes headed towards thirty million. Before Masa-san started really hurting them, NTT's attitude toward fiber was talking big for the government but leaving fiber out of the capital spending budget. Without Matthias Kurth's support of competition, Germany would still have some of the highest broadband prices and lowest broadband penetration. The EU is right; the Merkel government is making a mistake acquiescing in DT's proposed re-monopolization. Germany is now dramatically behind

In the U.S., a few hundred votes in Florida in 2000 would have swung the election. Democrats aren't all saints—Reed's telco policies ultimately proved flawed—but Kennard was on track for four or five broadband networks instead of the telco/cable duopoly. Verizon and SBC had committed billions to competing nationally in return for merger approval. Ed Whitacre told Wall Street in early 2000 "National—Local" was a serious plan, not a political sham. At least one of the Covad/Rhythms/NorthPoint group should have survived, while AT&T would probably have gone ahead with their 3,000 DSLAM national plan.

Four or five networks, in turn, makes 100 megabit upgrades the logical business choice in 2007, as we are seeing in France.

Happy holidays to all.

Copyright 2007 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

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