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House testimony: Return to pro-competitive telecom policies

Consumer groups call for return to pro-competitive telecom policies
in testimony today before House Commerce Committee
Recent wave of mergers drown out the competition

Wednesday, March 2, 2005
Kenneth DeGraff, CU, 202-462-6262
Mark Cooper, CFA, (301) 807-1623
(Washington, D.C.) — The telecommunications industry is already too consolidated, and further mergers, such as those proposed by SBC-AT&T and Verizon-MCI, would lead to higher prices and lower quality for consumers, two leading nonprofit consumer groups said in testimony today before the House Energy and Commerce Committee.
Gene Kimmelman, senior director for public policy at Consumers Union, the nonprofit, independent publisher of Consumer Reports, stated in his testimony that, “The recent wave of proposed mergers in the telecommunications industry — SBC attempting to gobble up AT&T, and Verizon trying to swallow MCI — mark the ultimate demise of the era in which consumers could expect more and more choices and lower prices for local, long distance, wireless and new Internet-based services exploding on the market.”
Mark Cooper, director of research for the Consumer Federation of America, said: “The merger wave is drowning competition in the communications marketplace. Most Americans today face higher phone bills, fewer choices, and worse service quality as a direct result of the massive industry consolidation we have seen in recent years.”
Cooper said that the Federal Communications Commission (FCC) should block the merger or impose significant conditions on its approval.
“These proposed mergers should set off alarm bells for Congress – the industry has cried wolf too many times. When SBC took over Pacific Telesis and Ameritech, and then when Bell Atlantic and NYNEX ate GTE becoming Verizon, the corporate executive promised their mergers would unleash a wave of competition that would lead to lower prices and better quality. Instead, the opposite happened. It is always the next merger that they claim will unleash competition, but it never does.”
Added Kimmelman: “The telecom industry is broken and needs to be fixed. Congress must fundamentally break apart the current ‘Ma Bell’-reminiscent model in its rewrite of the 1996 Telecommunications Act. It must bring more competition and choice to the marketplace, such as by opening up the basic telecom infrastructure to competitors and encouraging and upholding the ability of municipalities to build out their own broadband networks. Only then will we have a chance at providing affordable telephone and high-speed Internet service to all consumers.”
To read the CU/CFA testimony, click here