The FCC has modified the terms of the AT&T and Bellsouth merger:

AT&T is required to offer a reduced rate to other phone companies that use its networks to connect calls. That means former Bell phone companies Verizon and Qwest, which use AT&T networks in some U.S. regions, would also pay the lower rate.

AT&T had previously agreed to cut the rate on the condition that Verizon and Qwest do the same, incurring the wrath of Verizon and Qwest and raising questions among some lawmakers.

US FCC agrees to changed AT&T/BellSouth condition, Reuters, March 27, 2007; 2:56 PM

On the one hand, this seems to level the playing field somewhat.

Of course, there is a sop in there for AT&T:

Since then, AT&T offered to modify the condition, even though it believes the original is “lawful and fully justified by market conditions.”

As part of the order, the FCC said AT&T will only have to offer the reduced rate for 39 months instead of 48 months.

It’s an interesting sort of market where there are only three players, although that’s still more than the duopoly of telco and cableco that most people have available for local broadband access.

-jsq