One day after offering a new set of merger conditions to the FCC, and hours before the agency wrapped up its final day of business for 2006, AT&T and BellSouth were at last permitted to proceed with their historic $86 billion union, as the four FCC commissioners involved in the merger proceeding voted unanimously to approve the deal. Upon receiving news of the FCC’s vote, AT&T and BellSouth wasted no time in fulfilling their goal of completing the merger before the end of 2006, as they closed the transaction immediately. Boasting a market capitalization of $225 billion, the newly combined company ranks as a telecom services titan that far outpaces Verizon Communications, its closest competitor, in size and scope. In addition to serving 67.5 million local phone lines and more than 11.5 million broadband users in 22 states, the post-merger AT&T will assume full control of Cingular Wireless, the largest mobile services provider in the nation. AT&T, which has already launched IP-based multichannel video services in 11 markets, is also expected to emerge as a key rival against the cable industry in the BellSouth territory, where AT&T expects to deploy video services to 1.5 million homes by the end of this year. (The company also aims to reach 19 million homes throughout the central and southwestern U.S. by the end of 2008.) However, to win the assent of the FCC’s two Democrats, Commissioners Michael Copps and Jonathan Adelstein, AT&T and BellSouth agreed voluntarily, in a filing dated December 28, to observe net neutrality conditions that prohibit the merged entity from discriminating against competitive ISPs in terms of pricing or network access. Among other things, the companies also agreed to freeze rates for special access services offered to large business customers and to divest wireless frequencies in the 2.5 GHz band that are earmarked for WiMax services. Declaring that, “a historic merger warrants historic conditions,” Commissioner Adelstein applauded the commitments made by the companies, predicting: “consumers . . . will have more access to more affordable broadband services.” Incoming House Telecom Subcommittee Chairman Ed Markey (D-MA) offered similar praise as he announced he was “pleased that the concerns of the Internet community are being acknowledged and addressed.” However, in a joint statement with his Republican colleague, Commissioner Deborah Tate, FCC Chairman Kevin Martin called the net neutrality conditions “unnecessary” and warned that the conditions “have very little to do with the merger at hand and very well may cause greater problems than the speculative problems they seek to address.” In a statement on the merger’s closing, AT&T CEO Ed Whitacre, Jr. promised that the post-merger AT&T “will be an engine for innovation, competition and growth for our customers at home and abroad.”