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Bush decision leads AT&T to stop competing for local phone service

Wednesday, June 23, 2004
Susan Herold, 202-462-6262

AT&T Plan to Stop Competing in Some Markets Indicates Damage Bush Administration Decision Has on Local Phone Competition

(Washington, D.C.) – Today’s announcement by AT&T that it will stop competing for local and long distance customers in seven states due to the Bush Administration letting stand a court ruling favoring the Bell telephone companies indicates how damaging the Administration’s decision is to local phone competition – and lower phone bills for consumers.
“The move by AT&T to stop competing in several major markets is just the beginning of the end of local phone competition,” said Gene Kimmelman, senior public policy director for Consumers Union, publisher of Consumer Reports. “By failing to stand up for a policy that supports competition, the Bush Administration effectively sentenced consumers to a fate of higher prices and poorer service when it comes to their local and long-distance service.”
The Administration’s decision June 9 not to appeal a federal court ruling overturning the Federal Communication Commission’s pro-competition rules allows the Bells to raise the wholesale rates it charges competitors who use their lines and equipment. Those who currently compete against the Bells are expected to quickly be priced out of the market, and many of the so-called “competitors” to traditional local phone service – such as wireless and telephone over the Internet (VOIP) — also are owned or dominated by the Bells.
Verizon, the nation’s largest wireless provider, controls much of the local phone market on the East Coast. Cingular Wireless, owned by phone giants SBC Communications and Bell South — which control local phone markets in California, the South and Midwest — is in the process of acquiring AT&T Wireless.
“With the Bells dominating many of the companies and technologies that are their so-called competitors, we can expect meaningful competition to dry up and prices to increase,” Kimmelman said.
“The Administration’s failure to challenge the ruling and provide leadership on this critical issue has paved the way for the Bells to drive out any real competitors still remaining, which ultimately will lead to higher rates and poorer service for many consumers,” he said.
“Unfortunately, we have gone ‘back to the future’ in the worst way – with the Bell monopolies once again controlling phone service,” Kimmelman added.