Long-distance Cos., Consumer Groups Oppose SBC Buying Ameritech
Bloomberg News
October 15, 1998, 4:55 p.m. ET
Long-distance Cos., Consumer Groups Oppose SBC Buying Ameritech
Washington, Oct. 15 (Bloomberg) -- The nation's three
largest long-distance phone companies, consumer groups, and
others have mounted a campaign against SBC Corp.'s $69.5 billion
purchase of Ameritech Corp., saying it will thwart local phone
competition.
AT&T Corp., MCI WorldCom Inc. Sprint Corp., and consumer
groups told the U.S. Federal Communications Commission today that
the SBC-Ameritech transaction should be blocked outright because
it would reduce the likelihood of true competition in the local
phone market. Instead, it would allow SBC and Ameritech to
further solidify their monopoly positions.
''There are no conditions that are going to fix this
problem, because the loss of a potential competitor is forever,''
said Richard Devlin, Sprint Corp. executive vice president of law
and external affairs. Sprint, AT&T and MCI WorldCom are all
trying to compete against the Baby Bells in the local phone
business.
The FCC review of the transaction will consider whether it's
in the broad public interest, while the U.S. Department of
Justice will determine whether it violates antitrust laws. The
first batch of comments on the combination were due at the FCC
today.
Ameritech launched a preemptive strike yesterday against
critics of the SBC-Ameritech combination, briefing reporters on
the merits of the transaction. Only a combined SBC-Ameritech will
have the size and scope necessary to compete with global
telecommunications companies like AT&T, MCI-WorldCOm and others,
said Kelly Welsh, Ameritech's general counsel.
SBC and Ameritech are also touting the transaction as an
answer to local competition. They've told regulators that by
combining their resources, the new company will have the
necessary financial backing to compete in the local phone
business in 30 markets outside of their region.
Opposing Arguments
Sprint said in its FCC filing that the ''premise of the
strategy defies commercial realities, common sense and does not,
in any event, have any substantiated tie with the merger.''
MCI Worldcom agreed. ''If SBC and Ameritech would not find
it in their overall economic interests to compete out of region
without the merger, they will not compete out of region even if
they merge,'' the company said in its FCC filing. '' The merger
is essentially irrelevant to the likelihood that SBC and
Ameritech will compete outside their current regions.''
Consumers Union and the Consumer Federation of America said
the past anti-competitive behavior of SBC and Ameritech are an
indication of how the two combined would behave.
''They have thrown every barrier imaginable to competition,
in particular with SBC earning a national reputation as the Baby
Bell most hostile to competitors,'' said Janee Briesemeister, a
Consumers Union senior policy analyst.
The Communications Workers of America, which represents
78,000 employees at SBC and 30,000 at Ameritech, came out in
favor of the combination. The union cited SBC and Ameritech's
commitment to compete in the residential phone business outside
of their region, which the union says will create at least 8,000
jobs.
--Heather Fleming and Alan Wolf in Washington, (202) 624-1835/ah |
