SBC’s acquisition of AT&T shows failure of deregulation

SBC TO ACQUIRE AT&T,
THE FINAL ACT IN THE FAILURE OF DEREGULATION
Congress Should Restore Consumer Protection Where Competition Has Failed
For Immediate Release
January 31, 2005
Contact:
Gene Kimmelman, Consumers Union, 202-462-6262
Mark Cooper, CFA, 301-384-2204
Washington, D.C. “The imminent acquisition of AT&T by SBC is a symbolic reminder that the Telecommunications Act of 1996 has failed to produce the vigorous competition that was promised,” said Gene Kimmelman, Senior Director of Public Policy and Advocacy for Consumers Union. “For most consumers, the communications market is rapidly deteriorating into a duopoly dominated by two firms because of the failure of new entrants to gain a foothold in the market.”
“Consumers have only two choices – a single cable company that dominates video and high speed Internet or a regional Bell operating company that dominates local, long distance and wireless telecommunications,” said Mark Cooper, Director of Research at the Consumer Federation of America. “Two companies are not enough to provide serious price competition or strong incentives to innovate.”
“The Bells and cable companies have become fixated with putting together large bundles of services, that only the richest Americans can afford.

• “Only about one-fifth of American households, with an average income of approximately $60,000 per year, currently subscribes to the broadband Internet, cable/satellite, and wireless.
• “For the remaining 80 percent of American households, with an average income of about $37,000 per year, the big bundles require a substantial increase in expenditures. For half of American households, the bundles require a doubling of monthly costs. This is simply not competition for the vast majority of Americans.”

“While this is not the largest merger of recent years,” Kimmelman added, “it is very troubling because it demonstrates the complete failure of policy to promote competition in the marketplace and would mark one of the final acts in the long running reconsolidation of the industry. It is time for Congress to reconsider the deregulation experiment of the 1996 Act and give consumers the protection that market forces are failing to provide.”

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