Google Is The Big Loser In AT&T-BellSouth Deal

Lost in all the hooplah surrounding the impeding buyout of BellSouth by AT&T is this simple fact: Google and other Web sites are the big losers, because the new Telco behemoth will force sites to pay extortion fees if they want adequate bandwidth. Both AT&T and BellSouth have said that they plan to charge sites like Google extra fees if those sites want enough bandwidth to serve their customers.

Up until now the only things Google and other sites have to protect them are competition and federal law.

But with AT&T buying out BellSouth, competition is going the way of the dodo bird. The combined company covers a massive chunk of the US, from Florida in the east to California in the west, from Texas in the south to Illinois in the north. The market value of the company will be in the range of $150 billion, about fifty percent bigger than its largest competitor, Verizon.

It's looking a lot like the old days of the AT&T phone monopoly, except this day the company owns the Net as well. And if there is so little competition, AT&T can get away with demanding extra fees from Google and other Web sites.

As for federal regulation, AT&T and other telcos have been pushing for laws to let them charge extra fees to Web sites. AT&T already has Congress in its pocket. But now that the company will be worth $150 billion, and stretches across the entire continental U.S., the fix will be in even worse than it is now.The deal has to pass FCC approval. The FCC could demand that the combined company agree to "Net Neutrality" -- in other words, that it won't be allowed to charge sites extra fees, or block services.

I don't expect the FCC to do that, so it's time to lobby the FCC and let them know to stop the merger.