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Press
Release Contact:
Wednesday, October 25,
2000
Gene Kimmelman/David Butler
202/462-6262
Consumers
Union's Washington, DC Office
AT&T's decision to orphan off its
consumer long-distance business
could seriously harm competition and lead to higher
prices
WASHINGTON, D.C. -- AT&T today announced
plans to split its operations into four new companies: AT&T
Wireless, AT&T Broadband, AT&T Business, and AT&T
Consumer.
Gene Kimmelman, Co-Director of Consumers
Union's Washington, D.C. office, made the following statement today
in response to AT&T's announcement:
"AT&T's decision to break itself into four
companies is an ominous sign that the deregulation of the
telecommunications industry is not working.
"When Congress deregulated the telecom industry
four years ago, the government assumed that cable and phone companies
could provide a full set of services in competition with each other,
a full set including cable TV, local and long-distance telephone, and
Internet services.
"AT&T invested heavily to try to become
such a company. But AT&T couldn't make it work. This is a
marketplace disaster caused by a profound mistake in policy. It shows
us that the belief that telecommunications deregulation would lead to
lower prices and better services as a result of wire-to-wire
competition was a fantasy.
"One of the immediate concerns for consumers is
how this break-up will affect the price of long-distance service and
the possibility of local phone competition. Given AT&T's debt
and the pressure on its stock price, the company is no longer in a
good position to compete with the local Bell monopolies that are
beginning to offer long distance. AT&T's weak position could
eventually lead to a hike in long distance prices.
"AT&T's decision today is a total
repudiation of federal policy since the passage of the
Telecommunications Reform Act in 1996. In light of this, it is
critical that the new administration, Congress, and the Federal
Communications Commission go back to the drawing board to come up
with a better way to promote more choice and lower prices for
telecommunications."
Consumers Union, publisher of Consumer Reports magazine, is an independent nonprofit testing, educational and information organization serving only the consumer. 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.
