Groups ask Justice Department to reject AT&T, BellSouth merger

March 5, 2006
FOR IMMEDIATE RELEASE
Consumer Groups Ask Justice Department to Reject AT&T, BellSouth Merger
(Washington, DC)— Consumers Union and Consumer Federation of America said today they will ask the Justice Department to block the merger between telephone giants AT&T and BellSouth.
“Congress and federal regulators need to look carefully at the lifeless ‘competition’ their flawed policies have created and reject this merger,” said Gene Kimmelman, vice president for federal and international affairs for Consumers Union. “The government has been deceived before by promises that somehow more concentration would produce more choices and competition, when the result has been just the opposite. It shouldn’t be fooled again.”
“If approved, this merger will lead to higher local, long distance and cell phone prices for consumers across the country,” Kimmelman added. He noted that the impact would be particularly devastating on consumers from the Carolinas to Florida and across the Southeastern U.S. where AT&T will no longer compete with BellSouth’s regional near-monopoly for telephone and DSL services.
Kimmelman said that if the government refuses to stand in the way of the recreation of the old telephone monopoly, it should at least require the merging companies to sell their Cingular wireless business to create more opportunities for competition between wireless and wireline services.
Despite claims that the merger might foster competition between phone companies and cable giants, cable companies are just now entering the phone market and are not yet positioned to compete with the national phone duopoly that will exist if the merger is approved. The only other potential competitor — voice-over-internet phone service (VOIP) — which relies on broadband connections, is threatened by the ability of the Bells and cable companies who own broadband wires to disrupt their VOIP transmissions.
Consumer Federation of America joined Consumers Union in calling on the Department of Justice to reject the merger.
“Telecommunications has now gone from a regulated monopoly to an unregulated duopoly with just two major players,” said Mark Cooper, director of consumer research for CFA. “Consumers know that is not enough competition to lower their prices and drive innovation, especially when the two companies providing Internet access have a long history of anti-competitive, anti-consumer behavior.”
Cooper added that as the government has encouraged concentration in these telecommunications industries, it has closed the door on robust competition in high-speed Internet by allowing phone and cable companies to prevent competitors from using their wires to offer an alternative broadband provider. “Broadband was one of the few remaining opportunities for competition in telephone service,” Cooper said. “Now that door has been closed. If Justice now approves this merger, it slams yet another door.”