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Press Release Friday, June 16, 2000 |
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WASHINGTON, D.C. -- Gene Kimmelman, co-director of Consumers
Union's Washington, DC office, made the following statement today
regarding the approval of the merger of Bell Atlantic and GTE, which
would create the largest local telephone company in the United
States:
"If the Federal Communications Commission (FCC) and antitrust
officials really wanted to jump-start broad-based telecommunications
competition, they would never have allowed Bell Atlantic and GTE to
merge. Nor would they have allowed most of the other local phone
company mergers that preceded this merger.
"With Bell Atlantic having already swallowed Nynex and now GTE, it
will control about one-third of all local phone lines in the country.
That's comparable to its twin, SBC Communications, which gobbled up
Pacific Telesis and Ameritech.
"Instead of being positioned to compete against each other, six of
the eight equal-sized local telephone monopolies have been
consolidated into two super-regional fortress monopolies, Bell
Atlantic and SBC. They are virtually insulated from a broad-based
competitive threat.
"By extending the advantages of an incumbent monopoly - linking
massive networks of telephone lines connecting about one-third of the
country, plus the customer relationships, good-will, name recognition
and other financial benefits that flow from their existing monopolies
- Bell Atlantic and SBC could make it virtually impossible for
potential competitors to provide adequate choice of local phone
service to consumers in most communities.
"Even if these companies comply with the market-opening
requirements of the 1996 Telecommunications Reform Act, they have a
stranglehold on about one-third of the assets necessary to provide
local service and connect long distance calls (i.e., local 'loops'
connecting telephone users to the phone network). That is likely to
thwart the development of effective competition in these markets.
"The recent cable television consolidation involving AT&T and
MediaOne, plus the pending AOL/Time Warner merger, is more likely to
lead to market splitting rather than full fledged two-wire
competition. They may compete on the margin for all the
telecommunications needs of high-volume video, phone and Internet
users. But cable companies are more likely to focus on television
and high-speed Internet, and local phone companies are more likely to
highlight telephone and data-Internet services. The result is likely
to be comfortable duopolies, which don't challenge each other's core
business, rather than aggressive competitors that offer consumers a
broad array of new service choices at ever-falling prices.
"Bell Atlantic/GTE is just the most recent chapter in a never
ending wave of consolidation that threatens to undermine the goals of
the 1996 Telecommunications Reform Act. With telephone companies
merging rather than competing, and cable companies expanding their
dominance over television into new high-speed interactive Internet
services, the law will not deliver on its promise of broad-based
competition and lower prices for consumers. It is time for consumers
to hold policymakers accountable for the failure to deliver lower
phone and cable rates, and the lack of competitive choice for the
most exciting new high-speed Internet services."
Consumers Union, publisher of Consumer Reports
magazine, is an independent nonprofit testing, educational and
information organization serving only the consumers. We are a
comprehensive source of unbiased advice about products and services,
personal finance, health, nutrition and other consumer concerns.
Since 1936, our mission has been to test products, inform the public
and protect consumers. Consumers Union is located online at
www.consumersunion.org
