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AT&T/BellSouth merger does nothing for consumers

Tuesday, October 24, 2006

AT&T/BellSouth Merger Does Nothing for Consumers
AT&T’s “Concessions” Will Only Increase Profits

(Washington, DC)— Consumer groups today warned the Federal Communications Commission not to be fooled by the proposed “concessions” offered by AT&T and BellSouth for approval of their merger. In comments filed with the FCC, Consumers Union, Consumer Federation of America, Free Press and U.S. Public Interest Research Group argue that consumers are still likely to see higher prices and lackluster service with this merger.
“AT&T’s concessions are nothing more than short-term candy for a few instead of long-term lower prices and better choices for all consumers. Consumers will still wind up paying inflated prices when these two phone giants merge and dominate local, long distance, wireless, and Internet services,” said Gene Kimmelman, senior vice president for Consumers Union.
The groups’ comments blast the concessions proposed by AT&T as offering consumers nothing more than “promotional marketing” to further AT&T’s profits by enticing customers to buy more of their services. The comments can be accessed at www.hearusnow.org.
This month, the Department of Justice gave their approval of the merger without any conditions. The FCC is now reviewing the merger, in part because FCC Commissioners Michael Copps and Jonathan Adelstein refused to approve it until the Commission conducted a thorough review and weighed the consequences of the merger for consumers.
One area of contention is the “network neutrality” provisions, where the groups argue AT&T’s concessions are inadequate.
“Allowing this merger to proceed without meaningful protections for Net Neutrality would deal a mortal blow to the free and open Internet as we know it,” said Josh Silver, executive director of Free Press. “Without Net Neutrality, AT&T would wield incredible power about what we what we see and where we surf on the Web. This new broadband behemoth would be free to undercut the thriving competition for content online and favor its own products with faster speeds and better service. And consumers will have nowhere else to turn.”
The AT&T/BellSouth merger is just the latest in a ten-year wave of consolidation following passage of the 1996 Telecommunications Reform Act – legislation intended to unleash competition among the baby Bells in both local and long-distance service.
Despite claims that this merger might foster competition between phone companies and cable giants, the fact is that cable companies are just now entering the phone market and are not positioned to compete with the national phone giant that will exist as a result of this merger.
“It is astonishing that the largest telecommunications company—showing a 74 percent increase in profit over the last year— would be allowed to merge without significant limitations on it market dominance. The Commission must take strong steps to preserve and strengthen the already minimal competition offered in telephone and broadband services,” said Mark Cooper, research director for Consumer Federation of America.
“The FCC needs to step up and impose meaningful conditions that will salvage what little competition is left,” said Kimmelman. “The government has been deceived before by false promises that mergers of potential competitors benefit the public. These ‘carrot on a stick’ concessions may fool a donkey, but won’t fool the American consumer,” added Kimmelman.
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Jennifer Fuson, CU, 202-462-6262 ext. 1121
Craig Aaron, Free Press 202-265-1490 ext. 25