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Press Release |
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WASHINGTON – Consumers Union challenged Congress to show some leadership in fighting merger mania and the inflated prices telephone monopolies charge Tuesday, offering lawmakers a plan to help consumers pocket $8 billion.
"The urge to merge rather than compete has engulfed virtually all facets of telecommunications, leaving consumers paying inflated prices from entrenching monopolies that are inadequately disciplined by either market or regulation," said Gene Kimmelman at a hearing held by the Senate Subcommittee on Antitrust Business Rights and Competition. "Consumers Union believes it is time for Congress to crack the whip on weak antitrust and regulatory responses to monopolistic behavior."
To cut the fat out of telephone pricing, Kimmelman proposed Congress:
The Bell companies and GTE earned at least 70 percent more than the national average return on equity last year, according Business Week. A core issue facing policy makers is how to bring down the charges for connecting consumers to competing telephone companies, which have been inflated far beyond market rates.
The hearing was held to examine the proposed telephone company merger between SBC and Ameritech announced last week. Kimmelman pointed out that this latest acquisition is part of a larger trend in the telecommunications industry which has witnessed local telephone companies merging with each other, long distance with itself and cable giants joining forces in monopolistic alliances. All this merger activity runs counter to the competitive principles outlined in the Telecommunications Act of 1996, according to Kimmelman, who called on Congress to put an end to such monopolistic consolidation.
"It is time for Congress to crack down on monopolistic practices by adjusting the 1996 Act to reflect competition’s snail’s pace in consumer markets," he told the committee.
