Two wrongs, or something like that

(Upstart) A federal court of appeals just invalidated a section of the SBC/Ameritech merger yesterday. I thought this would feel better: After all the screaming I did around the office when the FCC let them go through with the plan, I figured there’d be a celebration—maybe get drinks after work and laugh at the fools. But there won’t be.

Sure, forcing the RBOC to unbundle its DSL service will help CLECs and ISPs who want to try their hand at high-speed resale. But resale itself won’t help the industry much. As a single-sided business plan, we’ve already learned that it doesn’t work very well—remember the LD and local players a few years back? Maybe it will help carriers move into markets run by SBC/Ameritech, but that’s unlikely. Besides, this should have been taken care of before the merger was approved, not months later.

What this really brings into question is the validity of the FCC decision as a whole. We already knew that allowing Ameritech, which wasn’t exactly known for friendliness to competitors, to merge with the monster SBC on grounds that it was good for competition made Kennard look schizophrenic at best. I won’t even go into what he looked like at worst. But what’s more is that it essentially allowed the company to create a separate entity that was not required to sell its high-speed network.

So the decision was good. It righted some wrongs. But I’m still not confident that the decision will have much of an effect. I’ve become a little skeptical over the last few months: The approval of the merger has already started too much spinning, and splitting the companies is an unlikely outcome from the decision.

The decision may not even help CLECs that are trying to move into SBC’s territory. The reason cited by the FCC for making the company create a separate data entity was the fear that it would treat its competitors unfairly. (Apparently not offering wholesale DSL is more fair.) This decision won’t change that.

Really, the only company it seems to help is AT&T, which has done the most cheerleading for the decision. The reason’s simple: It’ll likely be forced to open its own cable network soon, so this levels the field. Now neither company will have a monopoly over its high-speed network. And, there will be small competitors nagging them, so they’ll both be able to buy out other huge companies to stay competitive. Hey, at least it’s fair.

Staff Writer David Schober screams around the office a lot. Give him a holler at david_schober@intertec.com.