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The FCC approved AT&T’s $85.8 billion takeover of BellSouth. Not surprisingly, the deal is the largest ever in U.S. telecommunications history. The newly formed company now has a market capitalization of over $220 billion which makes it more than double in size compared to its biggest competitor Verizon.
AT&T will now have 67.5 million phone customers in 22 states and 11.5 million broadband users. The company has already announced its intent to implement Internet video service as quickly as possible. The plan is to reach 19 million homes by the end of 2008. Both AT&T and Verizon are moving into TV land to compete with cable companies that have been offering TV as part of value bundles that also include phone and Internet service. Right now Verizon is in the lead with 118,000 signed up for its TV service.
As to the fate of Cingular Wireless, well, it was a joint venture between AT&T and BellSouth and a mighty profitable one, being the largest U.S. carrier with 58.7 million subscribers. But now AT&T will take full control of Cingular and has plans to phase out the Cingular brand and replace it with AT&T.
Big plans, though there may be bad news associated with this take over. Net Neutrality has been a key issue raised throughout the negotiations, though AT&T has pledged to keep its “wireline broadband Internet access service” neutral. Meaning, whether you use Google, Yahoo, Microsoft or whatever search engine / portal of your choice, they all are treated the same when delivered to you through an AT&T-based connection.
But Susan Crawford brings up the point that “wireline broadband Internet access service” means traditional copper-wire digital subscriber line access generally provided by phone companies (such as AT&T). It may be faster than dial-up but is quickly losing its appeal. Cable internet access is the more popular contender in the U.S., which is why AT&T has been working on a massive network upgrade now called “U-verse.”
The new service has been named “AT&T Yahoo! High Speed Internet U-verse Enabled.” It has speeds around 6 Mbps for downloading (again, much faster than the copper-wire equivalent, though it still has a ways to go when compared to 100 Mbps speeds already offered in some countries). But the new service will also use “middleware” (software) from Alcatel and Microsoft and other companies to prioritize and privilege particular packets.
What this means is that websites will not necessarily be able to reach AT&T U-verse subscribers at the same high speeds. Net neutrality may turn into a buzzword of the past. As Crawford puts it:
“This means that naked, neutral, non-prioritized internet access (for AT&T customers, anyway) stays at 2001 speeds. AT&T has no incentive to upgrade its existing DSL facilities — it wants to move everyone to this new U-verse… AT&T is effectively saying, “We’ll keep existing ‘broadband’ access neutral. But when it comes to our new super-duper ‘AT&T Yahoo! High Speed Internet U-verse Enabled,’ well, that’s not up for negotiation.”