Justice Department to Review Verizon, AT&T

The Wall Street Journal is reporting that the US Department of Justice is now looking at industry giants Verizon (NYSE:VZ, news, filings) and AT&T (NYSE:T, news, filings).  They have opened an informal inquiry into whether the two have abused their market dominance following the M&A that sailed through the previous administration’s more favorable regulatory atmosphere.  They seem to be focused on:

• Whether exclusivity agreements with handset makers, i.e. the iPhone, should be allowed, and
• To what extent they can limit the services other people provide over their networks, i.e. network neutrality.

My impression is that the iPhone is where they might actually do something.  It is relatively easy to argue that they are using their bulk to crowd out the competition there.  Network neutrality is something that is very difficult to address, I think the idea is simply to keep some pressure going on the subject rather than to actually find something to enforce.  What the DOJ doesn’t seem to be looking as much yet are things like special access and wireless backhaul, so let’s not get too excited.  They are playing to the consumers, not to the CLECs or alternative operators.  Ah, politics.

Regardless, I strongly expect that the Obama administration has bigger fish to fry and isn’t likely to move beyond the investigation stage for a while, if they ever do.  I consider this move to be a shot off the bow, a warning to AT&T and Verizon not to try anything fancy.  And I think both will take it seriously, we’re therefore not likely to see either make a bid for Qwest longhaul or anything else big enough to make a difference.  Both have already shifted from an offensive stance during much of the past few years to a defensive stance this year.

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Categories: Cloud Computing · Government Regulations · ILECs, PTTs