Press Release Wednesday, January 20, 1999

Contact: Martha Hogerty (MO) 573-751-4857 Susan Merryman (OH) 614-466-9491 John Cameron (IL) 312-427-2304 Marty Cohen, (IL) 312-263-4282 Regina Costa (CA) 415-929-8876 Rick Gamber (MI) 517-482-6262 Chris DeWitt (MI-AG) 517-373-8060 Keith L. Beall (IN) 317-232-2494 Mark Cooper (MD) 301-384-2204 Rick Guzman (TX) 512-936-7509 Janee Briesemeister (TX) 512-477-4431 Jerry Polk (IN) 317-205-3535 Eric Bailey (CT) 860-561-6146 Marie Spicuzza (IL) 312-345-2436

Consumer Groups Unite to Oppose SBC-Ameritech Merger
White Paper Outlines Potential Harm for Consumers

(January 20, 1999) - A broad range of state and national consumer groups today came together to announce their opposition to the proposed merger between SBC Communications, Inc. and Ameritech Corporation. Groups representing an array of geographically and institutionally diverse entities, including organizations from the major states served by SBC and Ameritech, released a jointly prepared white paper entitled, The Consumer Case Against the SBC-Ameritech Merger. The release of the white paper serves as a call to state and federal regulators to stop the merger.

"We have concluded that the merger would be a severe blow to the development of competition in local telecommunications markets, particularly for residential consumers," said Martha Hogerty, Missouri Office of the Public Counsel, speaking on behalf of the groups. "The sheer size of the firm that would be created by the merger dwarfs virtually all competitors in the industry," she added.

"The merger will be a devastating blow to the feeble forces of competition that have been struggling to become established," Janee Briesemeister of the Southwest Regional Office of Consumers Union said. "Bigger companies mean fewer choices and higher prices for consumers."

"Claims of the competitive benefits of the SBC-Ameritech merger ring hollow when one considers that despite the concerted efforts of the Michigan Legislature, the Michigan Public Service Commission and my office to foster competition, Ameritech-Michigan still serves over 96 percent of the access lines in its service territory," said Jennifer M. Granholm, Michigan Attorney General. "Clearly, approval of the merger would be a significant setback in our effort to bring real competition to the telecommunications market in Michigan," she added.

"It is difficult to see how Californians benefited from SBC's acquisition of Pacific Bell. We have seen proposals for rate increases, public offices have been closed, the company attempted to charge fees to customers paying their bills in person, aggressive and misleading marketing tactics have been used to oversell services, and the door to competition has been slammed shut," Regina Costa of TURN said. "We fully expect that SBC's poor performance in California will be repeated in Ameritech states if this merger is permitted."

"If the FCC and the DOJ actually approve this merger, consumers end up with the worst from both worlds-a major local competition alternative is eliminated and customers end up having to absorb the costs of the merger. The acquisition cost for Ameritech could well exceed the book value of the company. Adding that premium to the premiums SBC has already paid to acquire SNET and PacBell, insures that consumers will face higher telephone service costs for years to come," said Rick Guzman of the Texas Office of Public Utility Counsel. "So long competition, hello higher prices."

"Based upon principles of economics as demonstrated in SBC's own conduct in recent years, the merger can be expected to stifle competition, stifle the development of new technology and result in further degradation of service quality," Rick Gamber of the Michigan Consumer Federation said. "SBC's merger application is so inherently flawed that no combination of conditions would be sufficient to protect the public interest against the anti-competitive consequences."

"SBC had formally identified Chicago as a likely market for entry in defending its takeover of PacTel; now it claims it had changed its mind," David Stahr of Citizen Action of Illinois said. "We're convinced that Illinois will end up with less competition as a result of this merger, not more."

"Cook County State's Attorney's Office presented testimony that the proposed SBC/Ameritech merger is not in the public interest," Marie Spicuzza of the Cook County State's Attorney's Office said. " SBC proposes takeover of Ameritech creates a number of serious risks for Illinois consumers."

The consumer document released today highlights arguments that include:

• There is a fundamental difference between the SBC-Ameritech merger and previous mergers between local telephone companies that have been approved. The merger poses unique regional problems because the greater the market power at the regional and national levels, the less the likelihood that competitors will break through in the local market and the greater the likelihood that market power will extend into related markets.
  
• The SBC-Ameritech merger reduces actual and potential local telephone competition. Ameritech began to scale back its local competition efforts after merger talks began.
  
• The SBC-Ameritech merger will make it more difficult for competitors to enter local markets in the SBC-Ameritech region. SBC-Ameritech would own about one-third of all local telephone lines in the country and would have almost a 50 percent market share of national business lines. The merger violates the DOJ Merger Guidelines on market concentration by a wide margin.
  
• The SBC-Ameritech merger does not provide significant competitive benefits in other markets. The merger harms or fails significantly to improve the prospects for competition in other markets¾ such as cable television, cellular telephone, and business and long distance markets¾ and the benefits it claims could be achieved in ways that do not harm competition.
  
• SBC's claims that retaliation by large telephone providers will increase competition are illogical and contrary to past Regional Bell Operating Company (RBOC) behavior.
  
• SBC has shown its willingness to engage in anti-competitive and abusive practices. Public interest groups note that SBC has earned a reputation, to quote a filing in Ohio proceedings, "as the most energetic Baby Bell in resisting competition." SBC refuses to open the local market and engages in abusive marketing tactics.
  

The groups supporting the document plan to submit it to the Federal Communications Commission and the Department of Justice as part of their ongoing review of the proposed merger.

Groups signing on to The Consumer Case Against the SBC-Ameritech Merger include:

· Missouri Office of the Public Counsel
· Texas Office of Public Utility Counsel
· The Utility Reform Network
· Citizens Utility Board (Illinois)
· Consumer Federation of America
· Michigan Consumer Federation
· Washington, Southwest and West Coast Regional Offices of the Consumers Union
· Citizen Action of Illinois
· Ohio Consumers' Counsel
· Jennifer M. Granholm Michigan Attorney General
· Connecticut Citizen Action Group
· Citizens Action Coalition of Indiana
· Indiana Office of Utility Consumer Counselor.
· Cook County State's Attorney's

A copy of the white paper: The Consumer Case Against The SBC-Ameritech Merger