Senate Commerce Calls to ‘Review’ AT&T-BellSouth Deal

The Senate Judiciary Antitrust Subcommittee will hold hearings on the merger, according to a statement from Chmn. DeWine (R-Ohio) and Ranking Member Kohl (D-Wis.). “A key question will be, simply, is bigger going to be better for consumers,” they said: “We need to see whether the increased size of the new AT&T will bring consumer benefits, or harm competition. We need to see.”

“The proposed recombination of 2 of the remaining 4 Baby Bells will call into question our commitment to promote competition in the communications marketplace,” said Senate Commerce Committee Co-Chmn. Inouye (D-Hawaii). “Coming only 125 days after the FCC’s approval of the SBC-ATT merger, AT&T’s proposal to purchase BellSouth would remove yet another potential competitor from the communications marketplace,” Inouye said. The deal will require an “exacting review” by federal regulators and Congress to protect the public interest and preserve the benefits of competition, he said.

“This merger proposal is one that unquestionably merits the utmost scrutiny by government antitrust officials,” said House Telecom Subcommittee Ranking Member Markey (D-Mass.). “Twenty years after the government broke up Ma Bell, this deal represents a mother and child reunion,” Markey said, urging lawmakers to undertake a thorough review of the merger proposal to assess its impact on consumers and competition. Congress needs to ensure that telecom markets are “vigorously competitive and open to innovation,” he said.

The House Commerce Committee had no press statement Mon., and many Hill offices said they weren’t prepared to issue statements, having just learned of the weekend development. But several Hill sources said the merger already is raising alarm bells and could affect telecom negotiations. While the recent SBC-AT&T and Verizon-MCI mergers caused only a ripple on the Hill, those deals involved long-distance companies where mergers essentially made sense, Hill sources said. This deal is different, they said. “BellSouth is much stronger and capable of going out on its own and competing, where the long distance industries were sick industries,” said one Hill source. He and others interviewed said there will be a push for hearings to examine the potential impact on consumers and competition in the industry.

“I hate to say it, but poor Judge Greene is probably spinning in his grave,” said Thomas Bliley, former chmn. of the House Commerce Committee and one of the authors of the 1996 Telecom Act. It took nearly a decade to get competition after the breakup of AT&T, Bliley said. “Well, it’s Groundhog Day. We can only hope that Congress, the Justice Dept. and the FCC are going to look out for America’s business and residential consumers,” he said, adding he has serious reservations about the proposed merger. -- Anne Veigle

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Consumers groups cried “monopoly” in response to the pact and said it threatens network neutrality. If the deal flies, “at best, the new network giants in telecommunications will square off against the cable behemoths -- a cozy cartel of two companies in each market divvying up the profits from telephone, broadband and video,” said Free Press Policy Dir. Ben Scott: The old telecom monopoly “is being reconstituted, but the consumer protections we swapped for competition have not returned with the network giants.”

“AT&T wishes to be lord of the digital domain, able to impose a raft of tolls, fees and what they term ‘monetization’ strategies to the Internet” across all platforms, said Center for Digital Democracy Exec. Dir. Jeff Chester. He termed the merger the “direct result” of the FCC’s DSL classification decision, which “eliminated long- standing safeguards for the Internet.”

Consumers Union and the Consumer Federation of America (CFA) said they will ask DoJ to block the merger. “The government has been deceived before by promises that somehow more concentration would produce more choices and competition, when the result has been just the opposite,” said Gene Kimmelman, Consumers Union vp-federal & international affairs. Prices for cellphone, local and long- distance calls would rise, especially in the southeast U.S., where AT&T no longer would compete with BellSouth for phone and DSL customers, he said. Cable can’t yet compete effectively with phone companies for telecom services, and VoIP providers are at facilities owners’ mercy, Kimmelman said. If approved, the merged company at least should be required to sell the Cingular business, he added. CFA Research Dir. Mark Cooper said a merger approval would be doubly damaging, given the FCC’s DSL decision: “Broadband was one of the few remaining opportunities for competition in telephone service… If [DoJ] approves this merger, it slams yet another door.”