Consumer groups are rallying to oppose the mega telecom mergers before the
Department of Justice (DoJ) and the Federal Communications Commission (FCC).
The proposed deals between Verizon-MCI and SBC-AT&T, they say, will work
against a competitive market.
Verizon (Quote) is offering $8.4 billion to acquire long distance
carrier and Internet backbone provider MCI. SBC (Quote) hopes to
acquire AT&T for $16 billion.
While both of the Baby Bells are strong in local calling and home and small
business broadband, they lack the large IP data service deals between MCI
and AT&T with government agencies and corporations.
"The FCC and the DoJ cannot bury their heads in the sand and ignore the
destructive impact these simultaneous mergers would have on an already
highly concentrated industry," Ed Mierzwinski, U.S. PIRG Consumer Program
director, said in a statement.
If approved, Verizon, which boasts 53 million access lines and 3.6 million
DSL hookups, gains MCI's IP backbone spanning 140 countries and key
enterprise customers, including 75 U.S. government agencies. MCI is also the
nation's second-largest long-distance carrier.
SBC has 52 million access lines and 5.1 million DSL connections and would
add AT&T's Fortune 1000 accounts and a global network that spans 50
countries.
"We urge regulators to consider both merger applications in the context of
these companies' documented track record of flagrant disregard of their own
promises to compete, as well as their consistent self-serving, contradictory
statements as to the existence of competition in the industry," said Janee Briesemeister, a senior policy analyst at the Consumers Union.
Mark Cooper, the Consumer Federation of America's director of research, said
if the DOJ and FCC approve the mergers, Verizon and SBC will attain about a
90 percent market share in residential local wireline, 70 percent in long
distance and 40 percent to 50 percent in wireless.
"After a decade of market opening, the two firms being acquired account for
three-quarters of the competition in telephone markets," Cooper said. "These
are mergers between the No. 1 and a No. 2 or 3 sellers of
retail local and long distance, residential and business service, as well as
wholesale switching, transport and Internet backbone services."
If the mergers are approved, Cooper added, "The remaining competitors would
be minuscule in comparison, lacking the size and geographic reach to provide
a competitive check on the two dominant firms."
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