|
|
Press Release |
Contact: Mark Cooper, CFA, (301) 384-2204 |
Gene Kimmelman, Washington Co-Director, Consumers Union And
Dr. Mark Cooper, Research Director, Consumer Federation of America in Response to the Merger of SBC Communications Inc. and Ameritech
"The Department of Justice’s (DOJ) failure to block the merger of local telephone monopolies SBC Communications Inc. and Ameritech deals a death blow to the goal of promoting broad-based local telephone competition. This combined company will have control over local telephone service for about one-third of all consumers in the U.S., making it virtually impossible for anyone to compete for the vast majority of SBC’s customers. Even if SBC opens its local markets to potential competitors, no one will be able to effectively challenge the enormous advantage SBC gains from its fully-built network, marketing clout, and name recognition from Texas to the Great Lakes.
Both Congress and the Clinton Administration have made a mockery of pro-competitive telecommunications policy. First, Congress promoted foolhardy policies through the 1996 Telecommunications Act, which are driving up cable and many telephone prices. Then, the Clinton Administration opened the door to massive industry consolidation that undermines the potential growth of local phone competition.
The Department of Justice has the ultimate authority in our country for ensuring the competitiveness of the marketplace. By approving this merger without any significant conditions, the DOJ has put the final nail in the coffin of local residential telephone competition. Its inaction in merger after merger has created a telephone industry in which four companies - - or ultimately two companies if the merger wave continues - - will have complete local and regional monopolies that make up a small national cartel. These companies have expressed virtually no interest in or shown any inclination to compete for the telecommunications business of the vast majority of residential consumers.
DOJ’s inaction on these mergers also renders market opening under the Telecommunications Act of 1996 useless to residential ratepayers. By the time the administrative, regulatory and technological barriers to competition are finally removed, the economic barriers created by the mergers will be insurmountable. The residential market will be opened, but there will be no one who is able to offer meaningful choice for the vast majority of consumers.
The residential telephone consumer has been abandoned by the Clinton Administration’s DOJ. The suggestion that other state and federal regulatory agencies should promote competition under public interest and public utility commission laws and standards cannot reverse the consumer harm that results from failure to block market-concentrating mergers. When the market structure is so fundamentally flawed, the regulatory fixes that these agencies are forced to cobble together will be totally inadequate.
It is our intention to work with these other agencies and our sincere hope that they have the courage to do DOJ’s job and reject this merger. However, we will not participate in a charade that uses regulatory conditions to obscure the monopolistic structure that has been perpetuated and expanded in the local residential telephone market. Policy makers should not mislead consumers into thinking they may get competition, when that is virtually impossible."
