**STATEMENT OF**

**COMMISSIONER MICHAEL J. COPPS, CONCURRING**

Re: *In the Matter of AT&T and BellSouth Corporation Application for
Transfer of Control (WC Docket No. 06-74)*

We celebrate today not a triumph for huge corporate mergers but a modest
victory for American consumers. The AT&T-BellSouth transaction is the
largest telecommunications merger ever, the latest in a litany of former
Bell Company mergers that has gone on for nearly a decade. When it comes
to consolidation among communications giants, we operate in a world that
is certainly not of my choosing. Nor do I think it is what Congress had
in mind when it passed the Telecommunications Act of 1996. That
particular Congress intended to create a "pro-competitive, deregulatory"
communications environment. In the past several years, the FCC has been
disastrously selective in its reading of this two-fold charge. We
couldn't act quickly enough to approve every call to deregulate, but we
studiously avoided our obligation to encourage the kind of fair
competition necessary to protect consumers in a deregulated world. I
have made my disaffection with this course of Commission decision-making
clear ever since I came here more than five years ago. But as I have
said before, in the end we are charged with considering these mergers in
the context of the world that is, not the one that might have been. With
that as prologue, I began my consideration of this transaction wondering
if there was some equation by which I could support the combination
before us today---some way to ensure that consumers actually derive
tangible value instead of being left once again holding the bag of
higher prices and less competition.

We embarked upon a strange and tortured odyssey in October when the U.S.
Department of Justice incomprehensibly concluded that it had no concerns
about the AT&T/BellSouth merger. Instead of providing a reasoned
analysis of the effects this unprecedented merger might have on the
highly-complicated and increasingly concentrated telecommunications
market, all DOJ could produce was a "hear no evil, see no evil, speak no
evil" press release. Surreal as that was, we Commissioners were
initially asked to approve the merger the very next day ***without a
single condition*** to safeguard consumers, businesses, or the freedom
of the Internet. This is all the more astonishing when you consider that
this \$80-some odd billion dollar acquisition would result in a new
company with an estimated \$100 billion dollars in annual revenue,
employing over 300,000 people, owning 100% of Cingular (the nation's
largest wireless carrier), covering 22 states, providing service to over
11 million DSL customers, controlling the only choice most companies
have for business access services, serving over 67 million access lines,
and controlling nearly 23% of this country's broadband facilities.

It became clear to Commissioner Adelstein and me that if there were
going to be any consumer-friendly results from the transaction, it would
be up to us to represent and deliver upon the many concerns that
consumers had expressed to the Commission. To make matters still
worse---in a farce transcending the comedic, we were expected to
negotiate for safeguards without knowing who of the Commissioners were
actually participating in the proceeding---an ambiguity that could have
been resolved months earlier but for the alleged strategic benefits of
creating uncertainty in the process and the outcome. Fortunately, just
two weeks ago, this progress-inhibiting underbrush was finally cleared
away and we were able to accelerate the job of reaching an outcome.

From the start I made plain to all parties and stakeholders that it
would be a very steep hill for me to climb to support a merger of this
magnitude and consequence. Meeting with the parties, I raised many
concerns that questioned whether the merger would be consistent with the
public interest and represent an improvement over the status quo.

Before creating the largest Internet access provider in history, there
was the glaring need to ensure this merger would not usher in an age of
discrimination on the Internet---that wonder of technology whose freedom
and openness is so dramatically refashioning all of our lives. It was
time to add a fifth principle of neutrality to protect the huge network
the merged entity would control. How could we be party to a transaction
that would enhance both the capacity and the commercial incentive of the
new company to discriminate on the Net? History, it seems to me,
documents that when a firm has both the technological ability and the
business incentive to control a network to its own advantage, it will at
some point attempt to do just that.

We also heard the pleas of consumers, small businesses and others that
this transaction should bring tangible gains in terms of services and
prices to them and bring them now, not at some promised future date. A
company this deeply involved in controlling telecommunications networks
should also be expected to do its part to ensure that broadband is
deployed more quickly throughout the nation, including to rural America
and other under-served parts of the country. Finally, before
accumulating enormous additional market power in the special access
market, the company should address the well documented concern that
businesses are being charged inflated prices for high-volume voice and
data services---behavior that retards small business growth, inhibits
America's international competitive posture, and eventually trickles
down to consumers in higher costs.

Over the course of the intensely-busy weeks and months since we were
asked to approve a condition-less merger proceeding, I have had
wide-ranging discussions with many, many stakeholders that have been
useful, substantive and productive. Mergers of this magnitude cannot and
should not be considered without ongoing consultation with as many
stakeholders as possible. This is what Commissioner Adelstein and I
fought for and we were pleased when the Chairman provided, at our
request, an additional period of public comment during the course of our
deliberations. Indeed, I believe that this proceeding has allowed for
more comment and sharing of knowledge by interested parties than any
merger consideration that I have participated in during the five years I
have served on the Commission. It's still short of a perfect process,
but like the merger result itself, it ended better than it began.

After much hard work and countless hours of deliberation on all sides,
the applicants have now offered unprecedented and substantial
commitments that I believe will safeguard and serve the public interest
to a degree few envisioned at the time the merger item was presented to
the Commission. Would I have preferred to do even more? Of course. Am I
entirely satisfied? No. Do I agree with much of the analysis contained
in the Order? Decidedly not. The analysis falls far short of the mark in
many important respects. This is a major reason for my
concurrence---which is predicated on voting for the overall results of
the Order, including the commitments the applicants have made, without
endorsing all of the reasoning set forth in the Order. But I do believe
the overall outcome is a genuine step forward on the fronts I enumerate
below. I believe that the commitments concerning the future of the
Internet; consumer access to broadband, video, and advanced wireless
services; business prices for high-volume voice and data services;
competitor access to UNEs and interconnection; public safety and
disaster relief; and the repatriation of jobs to the United States
comprise a package that will benefit the American public for years to
come, and I am pleased to have worked toward this end. And the
conditions are expressly enforceable by the Commission. The results we
approve today allow me to concur in this Order.

I should make clear that this is a package of commitments composed of
many individual elements. Not every Commissioner has equal enthusiasm
for each element of the final item, so I am grateful for my colleagues'
willingness to look at the package as a whole in order to produce a
majority to approve or concur in the result we reach today. I think it
is a real credit to the strength of the institution and the working
relationships we have forged that we have been able to reach this
result.

***[Network Neutrality.]{.underline}*** Perhaps most important, we have
taken steps that will preserve and encourage the truly transformative
openness and power of the Internet. The Internet is surely this
generation's most transformative technology---perhaps as transformative
as any technology in history. It was conceived and nurtured in freedom
and it empowered not those who controlled the pipes but those at the
edges---consumers, you and me. I know there are some who still believe
that the government has no business overseeing any aspect of the
Internet (ignoring, of course, government\'s formative role in creating
the Internet in the first place). Their theory is that technology
mandates from on high will inevitably stifle innovation and are
antithetical to the de-centralized, non-hierarchical genius of the
Internet. My response is that in an age when the Internet is
increasingly controlled by a handful of massive private network
operators, the source of centralized authority that threatens the
Internet has dramatically shifted. The tiny group of corporations that
control access to the Internet is the greatest threat to Internet
freedom in our country today. If left unchecked, the merged entity
resulting from today's decision would have gained the ability to
fundamentally reshape the Internet as we know it---in whatever way best
serves its own profit motives, rather than preserving the integrity and
the effectiveness of the Internet.

The condition builds upon the four principles of net neutrality
unanimously adopted by this Commission and made enforceable in the
context of the Bell mergers completed last year. In addition to the
company's compliance with these four principles, the condition agreed to
by the merged entity includes a fifth principle that requires the
company to maintain a "neutral network and neutral routing" of internet
traffic between the customer's home or office and the Internet peering
point where traffic hits the Internet backbone. The company is
prohibited from privileging, degrading, or prioritizing any packets
along this route regardless of their source, ownership, or destination.
This obligation is enforceable at the FCC and is effective for two
years. It ensures that all Internet users have the ability to reach the
merged entities' millions of Internet users---without seeking the
company's permission or paying it a toll. The next Drudge Report,
Wikipedia, Craigslist, Instapundit, or Daily Kos should not have to seek
a massive corporation's blessing before it can begin reaching out to the
American public, and we can take considerable comfort from the fact that
today's condition prohibits such behavior. While I might have preferred
a longer duration, prior mergers resulted in similar time periods for
the net neutrality conditions and it is in my view sufficient to allow
Congress to take longer-term network neutrality action if it chooses to
do so.

Relatedly and importantly, the merged entity is required to continue to
maintain the present number of Internet backbone peering relationships
for the next three years. Thus the status quo in the Internet backbone
market is preserved by preventing the merged entity from using its
larger size and immense last-mile customer base to terminate the
settlement-free peering relationships that are fundamental to the
Internet as we know it. Read in conjunction with the network neutrality
obligation, this peering provision will help to protect the Internet
experience and the powerful opportunities it promises for the future.

***[Consumer Benefits.]{.underline}*** This Order clearly prevents the
merging parties from tying their Internet access service to the purchase
of traditional telephone service. Additionally the merged entity commits
to offer stand-alone DSL service at a more consumer-friendly price of
\$19.95/month. This should prove an enormous boon to customers who are
happy with their wireless service and seek to "cut the cord" on wireline
telephone service, or who want to take advantage of competing VoIP
services that have the potential to lower consumer phone bills.

At a more macro level, I have long maintained that consumers have been
sorely burdened by our nation's lack of a national broadband strategy.
Today, large swaths of rural America, low-income areas, and other
underserved populations lack access to affordable broadband services,
and our nation ranks 16^th^ in the world in broadband penetration
according to the International Telecommunications Union (ITU). In a more
recent and nuanced ITU Digital Opportunity Index, the United States
ranks 21^st^! These are not rankings to be proud of. There will be no
end to this downward spiral absent a comprehensive national strategy to
reverse it---just as every other industrialized country on the planet
has developed its own national broadband strategy. But, again, the focus
of today's merger proceeding cannot be on what might have been, but
rather on making sure that our Commission action doesn't make an already
bad situation even worse. So, even though we cannot promulgate such a
broad strategy, we do secure in this merger real, tangible, and
important broadband commitments that will ensure that this mega-merger
does not send us even further in the wrong direction and, yes, even tips
the balance a bit in the right direction.

First, the merged entity has committed to offer broadband to ***100%***
of the customers in its 22-state region by the end of 2007. There are no
exceptions for sparsely populated areas; in fact, the company has
committed that at least 30% of its new deployment will be in rural and
low income areas. Would I have liked this commitment to apply to the
faster speeds of fiber rather than to copper wire? Absolutely---but this
is at least a credible commitment and a tangible beginning. And the
company has agreed to at least accelerate its fiber build-out for the
AT&T region by acknowledging its intention to pass at least one and a
half million homes in the BellSouth region with fiber facilities by the
end of 2007. The new company will need to come back to the FCC at the
end of next year to tell us whether it has met its responsibility. I,
for one, will be watching closely to ensure that it does.

Second, in terms of affordable broadband, the company has agreed in its
22 states to offer new retail consumers its basic broadband service for
\$10 per month as well as a free modem to current dial-up customers in
order to make broadband affordable and available to many more people
than have it today. Put this commitment together with its broadband
deployment obligation, its \$19.95 Stand Alone DSL commitment, and its
commitment to preserve network neutrality, and I believe we have a
framework that will help provide affordable, user-friendly broadband for
consumers around the country.

Third, the more this agency can do to spur "third pipe" options for
competitive broadband services, the better. Without conditions the
merged entity would have held onto spectrum that it has not
substantially developed but that is uniquely suited to wireless
broadband applications. We know the merged entity will have little
business incentive to invest in building out this spectrum, because
doing so would just cannibalize its wireline broadband offerings as well
as the broadband wireless services it offers through Cingular. I am
therefore pleased that the company has agreed to divest its 2.5 GHz
spectrum licenses within 12 months and to use its 2.3 GHz spectrum
licenses in a timely manner or forfeit this spectrum as well. In doing
this, we have taken substantial steps to enable entrepreneurs to use
their talents to develop new, exciting wireless broadband applications
and we have ensured that the new company has the right incentives to
innovate with the spectrum it retains.

In crafting a set of measures to avoid the new company's abuse of its
Internet market power, we have also taken pains to preserve competition
in the very important market for plain old voice service---which is
still one of the more daunting bills that American households must pay
each month. One bright spot on the FCC's radar screen is the progress
that cable and other competitive providers are making through offerings
of facilities-based telephone service to residential customers. This
merger initially raised the specter of a consolidated entity---one
owning nearly all of the telephone network in roughly half the
country---using its market power to reverse the inroads that new
entrants have made and, in fact, to squeeze them out of the market
altogether. To mitigate this concern, the merged entity has agreed to
allow the portability of interconnection agreements and to ensure that
the process of reaching such agreements is streamlined. These are
important steps for fostering residential telephone competition and
ensuring that this merger does not in any way retard such competition.

**[*Benefits for Enterprise Services*:]{.underline}** Today's Order
makes substantial strides in limiting the merged entity's ability to use
its stranglehold over business access services in 22 states to raise
prices for special access to even more unreasonable heights. Nowhere is
the FCC's folly in de-regulating without ensuring competition more
apparent than in the special access market. As the Government
Accountability Office (GAO) recently pointed out, only 6% of buildings
with demand for special access services have any competitive alternative
besides the incumbent LEC. Indeed, the GAO report concludes that the
FCC's de-regulatory "price flex" regime has actually led to higher
prices in the very areas where one would ordinarily expect to find lower
prices. Today's Order helps restore balance by reinstituting price caps
throughout the 22 state footprint of the merging parties---a measure
that should result in approximately \$500 million in savings to
competitors. The Order also prohibits reliance on certain
anti-competitive contract conditions. Importantly, these protections are
in effect for a period of four years. While this is real progress, we
still have far to go. It is time for the FCC to finish its long-dormant
special access proceeding that has been languishing for years.

**[*Additional Benefits*:]{.underline}** A detailed reading of the
merged entity's commitments will show other important benefits in
addition to the ones I have already described. Let me briefly highlight
just a few of these. Because the loss of jobs is so often the first
cost-cutting move of any merger, I am pleased at the company's
willingness to repatriate approximately 3,000 jobs from overseas back to
the United States, with at least 200 jobs being created in the
hurricane-ravaged area of New Orleans. I believe this commitment is the
first such job repatriation ever to accompany a telecom merger. While I
fear other jobs will be lost, this provides at least some job comfort
for the company's employees. The revolution in communications that we
are witnessing must not come at the expense of America's hard-working
communications workers. Indeed, these high-quality, dedicated, and
organized workers are key to bringing us the next generation of
communications services.

I am also pleased that the merged company has made public safety
commitments that will help protect our nation's communications networks
in the event of a natural or man-made disaster. As I have often stated,
providing for the safety of the people is the most important role that a
government can fulfill. So I am pleased that the merged company will
ensure that legacy AT&T's first-rate disaster recovery resources will
now be made available in the former BellSouth states. The company should
be commended for developing these advanced capabilities beyond any
government mandate to do so, and I believe that expansion of this
capability to an additional broad swath of the nation is an important
step forward in readying ourself for the next disaster. I have also
stated that the FCC should lead the charge in securing the security,
reliability, and robustness of our networks, including through
public-private partnerships. Towards that end, the merged company will
donate \$1 million to non-profit or public entities for the purpose of
promoting public safety.

Our disabilities communities get easily left behind in such huge
transactions. So I am pleased that the merged entity has agreed to
produce an important report on its service to consumers with
disabilities---a report that can help the Commission in its mission,
mandated by statute, to ensure the availability of effective and
comparable communications tools to ***all*** our people. I should note
that Cingular Wireless---which will now be owned wholly by the merged
entity---has distinguished itself in its willingness to work with us on
disabilities and public safety issues. I look forward to continuing that
relationship in the years ahead, as well as to learning what new
initiatives and policies the merged entity will pursue to make sure that
every American has access to the wonders of the communications
revolution.

Further, in what many might see as a very technical agreement, but an
important one nonetheless, the company has agreed not to use our
forbearance procedures to evade or frustrate any of the commitments it
has made here. We have also been quite cognizant in recent months of the
Tunney Act proceeding concerning the prior merger between SBC and AT&T
that is currently pending in district court. While the resolution of
this issue will ultimately be between the federal courts and the Justice
Department, I do believe the FCC's public interest review of this merger
must take into account a concern about whether the ultimate decision in
the prior mergers will be reflected in this current, related merger. To
alleviate this concern, the company has agreed to come back to the FCC
after the courts and the Justice Department have resolved the pending
proceeding to work with us in good faith to ensure that any remedies
ultimately imposed in the prior merger are adequately addressed here.

In sum, I believe that we have made this transaction at least minimally
acceptable to American consumers. It brings price reductions rather than
price increases, more broadband rather than less, a free and open
Internet rather than one rife with opportunities to degrade and limit,
and numerous other safeguards and protections.

I would be remiss in not expressing gratitude to all parties who
participated in these discussions. So I thank them one and all. I wish
to thank the Chairman and Commissioner Tate who have spent so much time
and energy on this transaction for so many weeks and months. It detracts
from no one\'s effort to pay special thanks to my friend and colleague
Commissioner Adelstein for vision and perseverance that were so
important in getting us where we are today. My colleagues' personal
staffs worked long and hard to get this done and we appreciate
particularly the long hours and excellent contribution made by Scott
Bergmann of the Adelstein Office. I am grateful to the Bureau for all
the work it has done during the course of this proceeding. Most of all,
I thank my dedicated, hard-working and downright brilliant staff for
their tireless exertions during the pendancy of this proceeding. Scott
Deutchman, joined by Bruce Gottlieb, worked literally around the clock
on many occasions. They gave up family vacations, sacrificed holidays,
and pushed themselves far beyond what anyone should rightly expect.
Their good judgment, always-incisive analysis and remarkable outreach
skills are a huge reason why this agreement was reached.