by Sarah Lai Stirland

Thirty-three years ago, the antitrust subcommittee of the Senate Judiciary Committee held a hearing about AT&T's performance, its communications monopoly and allegations of its anti-competitive behavior. The forum was one of the first public places where the idea of breaking up Ma Bell was first floated.

This Thursday, the antitrust subcommittee will preside over a hearing where executives from the companies that used to comprise Ma Bell will discuss the competitive impact of reuniting, as AT&T prepares to acquire BellSouth. The merged firm would reinstate AT&T as the largest provider of communications services in the nation.

The questions about the nature of competition in the telecommunications market and the fears that AT&T competitors have of the merged firm's ability to abuse its position remain the same at the dawn of the 21st century as they did in the 1973. Many of the arguments also remain unchanged. Only the vocabulary to describe them has changed.

New Terms, Familiar Debate

One buzz phrase is "network neutrality." It means different things to different people, depending on where they stand along the chain of digital communications networks.

Infrastructure providers have characterized it as a dangerously vague concept that would prohibit them from offering specialized -- and sometimes faster -- Internet connections to unspecified kinds of customers willing to pay a premium.

Internet companies such as Amazon.com, eBay and Google, along with Bell competitors, have said a mandate that similar types of Internet content be treated equally would roll back recent legal developments deregulating the communications industry. The rule, they assert, would prevent dominant Web providers companies from behaving anti-competitively by "discriminating" against their products and services.

In Senate Judiciary Committee testimony last week, long-time telecommunications analyst Blair Levin noted the similarities between today's net neutrality debate and previous telecom discussions. "Network neutrality presents an old policy problem -- whether, and if so, how, to regulate a network -- but with a new set of facts: an unregulated duopoly of the most important platform for economic growth in the country," wrote Levin, now a managing director at Stifel, Nicolaus and Co.

"Net neutrality really is a proxy for something else," Jonathan Rubin, a senior fellow at the American Antitrust Institute, said in an interview. Rubin is scheduled to testify at the Thursday hearing about the AT&T and BellSouth merger.

"The antitrust perspective is that the network neutrality proponents themselves recognize that the essential problem that net neutrality tries to address is the lack of competition in the broadband access market," Rubin said. "Because of that, this raises the question of what is the best solution to what is essentially a competition problem."

Comcast Executive Vice President David Cohen told the subcommittee last week, "Antitrust laws are by far the best way to address any occurrence of the kinds of problems that network neutrality proponents say they are concerned about."

Confusion In The Courts?

Yet several players in the world of antitrust and telecommunications note that recent court decisions have blunted antitrust enforcers' tools. House Judiciary Committee Chairman James Sensenbrenner, R-Wis., is among the critics.

Sensenbrenner sponsored legislation to clarify congressional intent behind the existing body of antitrust law. But the House failed to include that language in the telecom bill it approved at the beginning of the month. Testifying before Senate Judiciary last week, Sensenbrenner said, "A record of considerable judicial confusion has developed in our nation's courts."

Specifically, he cited a series of appellate and Supreme Court rulings. In 2000, the 7th U.S. Circuit Court of Appeals ruled in Goldwasser v. Ameritech that a group of consumers could not use antitrust law to sue Ameritech, a dominant telecom carrier, because the 1996 Telecommunications Act addresses the issues and pre-empted antitrust law.

The Supreme Court in 2004 affirmed that line of thinking when it ruled against a complainant who had sued Verizon Communications (then Bell Atlantic). Curtis Trinko charged that Bell Atlantic had denied AT&T's customers non-discriminatory access to Bell Atlantic's network, in violation of both communications and antitrust law.

"This is precisely the judicial analysis that Congress precluded in the 1996 act, and this holding has done violence to remedial antitrust enforcement and competitive gains in the telecommunications marketplace," Sensenbrenner told Senate Judiciary.

His observations are shared by Bell competitors and a former Justice Department attorney who played a role in prosecuting the government's decades-long antitrust suit against the old AT&T.

"The Trinko opinion is remarkably tendentious and unremittingly hostile to the application of the antitrust laws to regulated industries," Philip Verveer, a partner at the law firm of Willkie Farr and Gallagher, said during a House Judiciary subcommittee hearing in 2005. "The decision greatly overvalues the ability of regulatory agencies to adjudicate monopolization claims and undervalues that of antitrust prosecutors in courts."

AT&T's competitors found some solace, however, in the high court's 2004 decision in NCTA v. Brand X Internet Services. Comptel President and CEO Earl Comstock said in an April hearing that he was heartened by the FTC's response to the decision. He said the agency considers it a green light to assert antitrust jurisdiction over "information services" now out of FCC reach.

Toward A Senate Compromise

Sensenbrenner urged Senate Judiciary to make sure that any telecom changes clarify and firmly establish the antitrust enforcement responsibilities of the various agencies. Committee Chairman Arlen Specter, R-Pa., appeared keen to ensure that a pending Senate telecom bill not diminish the FTC's role in enforcing antitrust laws.

The latest draft of the legislation as of the end of last week includes extensive language that is designed to prevent anti-competitive behavior and to preserve network neutrality. But it would give enforcement and adjudication authority to the FCC, and prevent the agency from enacting its own, additional rules on the matter.

Specter said he wants to work with Senate Commerce Chairman Ted Stevens, R-Alaska, to find a solution. But it is not clear that he has the unwavering support of many committee members. Several members of Specter's own party expressed reservations about intervening in the debate. Even Sen. Joseph Biden, D-Del., expressed caution on the subject, in contrast to other Democrats.

It is unclear how Senate Majority Leader Bill Frist, R-Tenn., may resolve the differences between the two committee chairmen. One indication may come from the White House, policy cues that Frist often follows.

"The administration believes that the FCC currently has sufficient authority to address potential abuses in the marketplace," read a June 8 White House statement issued after the House passage of a bill with limited net neutrality language. "Creating a new legislative framework for regulation in this area is premature."