The Bush administration has taken a dive on the crucial issue of keeping the Internet open and is preparing for more.

The flop came early on Wednesday, when the Justice Department issued a mere press release announcing it had approved AT&T's $67 billion takeover of BellSouth.

The administration is expected to hit the canvas a second time Friday, when the Federal Communications Commission gives the last approvals needed for the deal.

When the FCC acts, the largest telephone company in the country, AT&T, and the third largest, BellSouth, will be combined without any significant conditions or consumer protections.

Normally in these types of cases the parties sign a consent decree with Justice as a legally binding document. However, because U.S. District Court Judge Emmet Sullivan got curious about SBC's takeover of AT&T and Verizon's purchase of MCI and started asking questions, Justice got equally clever.

A formal consent decree is subject to court review under a law that allows a judge to determine if the agreement is in the public interest. Merely announcing the results of the Justice investigation (as the department has also done in the past) is not subject to court review. So, Justice decided to approve the AT&T-BellSouth merger in a way that would keep it out of court. There would be no follow up on such obscure concepts as the "public interest."

There was no public analysis. There were no conditions attached. No harm, no foul, and nothing to say about concepts like protecting the openness of the Internet.

Thomas O. Barnett, the assistant attorney general in charge of antitrust, devoted this one sentence to the topic: "The proposed acquisition does not raise competition concerns with respect to Internet services markets or 'net neutrality'".

Unfortunately, that is a mistaken, very narrow view of the world and a view that makes net neutrality—the idea that the telephone and cable companies shouldn't be able to play favorites when offering services—all the more important. Of course, the Justice Department view ignores the enormous market power the combined company will have on others, even if the individual companies had their own non-compete policy.

Antitrust officials based their decision on the fact that the companies don't compete with each other, and so competition wouldn't be harmed. Given that the companies don't compete, then, there's no threat to competition.

In an Alice-in-Wonderland sort of way, that logic works. For a while after the old Bell System was broken up, there was some hope that the then-seven local companies created at the time would compete against each other. That never happened. Companies preferred to stay within their geographical service areas and did not attempt to establish competitive beachheads in the territories of their former mates.

As a result, the industry has settled into the biggest near-duopoly ever created, with AT&T and Verizon splitting up most of the customers for local, long distance and Internet service.

Just for perspective, the current AT&T encompasses three former Bell companies created when the system was broken up: SBC, which served states from Texas to Missouri ; Ameritech, which served five Midwestern states; and Pacific Telesis, which had customers in California and Nevada . And, of course, the current AT&T includes the post-divestiture, long-distance version of the old AT&T.

On the outside looking in are Qwest (the original U S West from divestiture days) which operates in the sparse Rocky Mountain states, Pacific Northwest and Midwest ; and Verizon, the second largest telephone company that serves the lucrative Northeast.

What's more, when AT&T was combined with SBC, it inherited a deal SBC struck with Yahoo! to provide co-branded DSL service. The service includes a customizable Yahoo! home page and Yahoo! e-mail address. It is a short leap from merely making Yahoo! a default search engine on an AT&T service to hampering the ability of Yahoo! or any other company to have the best performing service unless the owner of the site pays a special fee to AT&T.

The Federal Communications Commission is expected to follow Justice in approving the big deal on Friday, with few, if any, conditions. In theory, the FCC is expected to factor in to its decisions the concept of the "public interest." There's no bigger interest to the public than maintaining a free and open Internet. But, like the Justice Department, the FCC is preparing to take a dive on the issue of net neutrality.

All indications are that the FCC will let the merger slip through. It will depend in large part on what concessions Democratic Commissioners Michael Copps and Jonathan Adelstein are able to wring from Republican Chairman Kevin Martin.

A fourth commissioner, Republican member Deborah Taylor Tate, plays the role of loyal subordinate to Martin. The fifth commissioner, Robert McDowell, a Republican, is recused because he formerly worked for the trade association of the competitive telecom industry. The result of the FCC decision will be an even larger company with even more leverage to muscle regulators, legislators, competitors and those who want to offer service over their networks.

The FCC will try to complete the dodge around net neutrality by opening a proceeding known as a "notice of inquiry" on "broadband industry practices" so that it will appear as if the Commission is doing something about the issue.

The bureaucratic sleight-of-hand here is that such a notice is the most preliminary step the agency can take. It means the Commission hides behind the false front of only "asking questions" to determine whether there is a need for the FCC to act.

Normally, the Commission sets out a problem and proposes a solution, which it then adopts after the normal procedures are followed. Unlike the situation in which the FCC proposes rules, with a notice of inquiry there is no guarantee that anything will happen. Frequently, the inquiries lead nowhere, as with such proceedings on topics ranging from interactive cable services to content protection for digital radio.

No one should expect a finding from this FCC that the Commission should preserve net neutrality. The phone and cable companies will say it's not an issue now. The Commission will agree. End of story.

We can only hope that at least there will be some questions in the notice that will get the companies on record about their current practices, and that at some point later down the road, a Commission with a more enlightened view of the public interest will reopen the docket and act to truly protect consumers, preserve innovation and keep the Internet open.