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To: Caxton Rhodes who wrote (2621)	6/16/1998 5:43:00 PM
From: Anthony Wong	Read Replies (1) \| Respond to of 11568

Leahy to Introduce Bill to Block Future Phone Mergers (Update1) Bloomberg News June 16, 1998, 1:36 p.m. PT Leahy to Introduce Bill to Block Future Phone Mergers (Update1) (Adds detail on bill in paragraph 5, and Bell Atlantic quote in paragraph 6) Washington, June 16 (Bloomberg) -- U.S. Senator Patrick Leahy, a Vermont Democrat, will introduce legislation to bar future mergers among the Baby Bell local phone companies and GTE Corp. unless federal requirements for local competition have been satisfied. ''Before all the pieces of Ma Bell are put together again, Congress should revisit the Telecommunications Act,'' Leahy said in a statement. ''Consolidation is taking precedence over competition. This bill puts the correct priority on competition.'' Since Congress revamped the nation's telecommunications laws in 1996, the number of regional Bell companies -- which were created as part of the government's break-up of AT&T Corp. in 1984 -- has dwindled from seven to five as Bell Atlantic Corp. purchased Nynex Corp. and SBC Communications Corp. bought Pacific Telesis Group. Last month, SBC announced plans to purchase Ameritech Corp. for about $65 billion in stock and debt, bringing the number of Bells down to four. The mergers come as members of Congress and consumer groups increasingly complain that competition in the local telephone business isn't developing at the pace predicted when the 1996 Telecommunications Act was signed into law by President Bill Clinton. The law directs the Baby Bells and GTE to allow new local phone rivals to buy their local phone service and resell it. Few companies are competing against the Bells for the less- lucrative residential customers. Before a local phone company could merge with another local phone company Leahy's bill would require them to prove to the FCC that the market-opening conditions spelled out in the act have been satisfied for at least half of the phone lines in each state. The bill applies only to companies that serve more than 5 percent of local phone lines in the U.S. Companies currently in that category are the five Baby Bells -- Ameritech Corp., BellSouth Corp., Bell Atlantic Corp., SBC Communications Corp. and US West Corp. -- and GTE Corp. ''We don't really understand what problem the legislation is designed to solve,'' said Susan Butta, a Bell Atlantic spokeswoman. She pointed out that the phone companies are subject to antitrust review, and federal and state regulatory approvals in order to merge with another phone company. ''No other industry faces such formidable scrutiny before a merger is allowed,'' she said. Senate Commerce Committee chairman John McCain, an Arizona Republican, also wants to overhaul the Telecommunications Act. He considers burdensome a requirement that the Bells meet a 14-point checklist designed to show their local markets are open to competition. Politically, it'll be difficult to make any major changes to the law. The powerful lobbying machines of both the Bells and the long-distance phone companies would likely thwart any efforts to modify the law. --Heather Fleming and Ann Marie Squeo in Washington (202) 624-