To: Stephen B. Temple who wrote (1326 ) 9/17/1998 5:05:00 PM From: Kenneth E. Phillipps Read Replies (2) | Respond to of 3178
From Tech Investor Investor News Telecom Mergers Threaten Competition (09/15/98; 6:20 p.m. ET) By Mary Mosquera, TechWeb WASHINGTON, D.C. -- Federal regulators should hold off on approving telecommunications company mergers, and Congress should take another look at the 1996 law that deregulated the industry, a public-interest group official told senators Tuesday. In hearings, the Senate Judiciary Committee's antitrust subcommittee examined consolidation in the telecom industry, specifically the $55 billion Bell Atlantic-GTE merger announced in July. Lawmakers are concerned about the shrinking number of local phone companies resulting from merger activity and the effect on competition. Federal regulators review mergers and also enforce the 1996 Telecommunications Act, which was passed to open up competition among local phone carriers and reduce customer prices. However, since passage of the law, mergers among local phone carriers have heated up more than the promised competition. "The Justice Department is deluged with work from Microsoft and the communications sector. It's time for Congress to do something," said Gene Kimmelman, co-director of Consumers Union, which opposes the Bell Atlantic-GTE merger. The Bell Atlantic-GTE merger will allow the company to bundle services, including local, long distance, wireless, and Internet. Eventually, the number of carriers capable of offering such bundles worldwide will eventually shrink to about six, according to Bell Atlantic CEO Ivan Seidenberg. "Combining with GTE is a necessary part of what Bell Atlantic must do to play in this new game," Seidenberg said. Rather than compete, the Baby Bells are merging with each other, said William Esrey, CEO of Sprint, and this merger activity runs counter to the promises of the telecom law. At some point, the market will become so concentrated that no company will try to compete in a Baby Bell's territory, Kimmelman said, recommending a temporary freeze on mergers in the industry to allow time for the 1996 law to be implemented properly. The consumer advocate also urged passage of a bill, S.2207, the Antitrust Improvement Act, to give regulators other mechanisms to enforce the telecom law and open up competition. Clark McLeod, the CEO of McLeodUSA, a small competitive local exchange carrier that has carved out a niche in Iowa delivering local phone service, testified before the lawmakers about difficulties the company has encountered doing business in U S West's business territory. McLeod resells access purchased from the regional Bell operating company and is building its own network. "It's been awful getting resale from the RBOC, and the Justice Department has not supported us, saying they do not have enough resources," McLeod said. The Senate subcommittee will conduct an official inquiry into the effects of the Telecom Act early next year, and the General Accounting Office will report its findings on telecom competition to Congress in February. Related Stories: Puzzlement Greets Carrier Merger Mania Execs Optimistic Over Telecom Consolidation Search Archives Stock Quotes Enter ticker symbol: symbol lookup Top Stories Taiwan Chip Maker Halts $14.5 Billion Plan Analysts: Don't Count On Intel-3Com Merger Dell, Compaq To Lead PC Stocks One-On-One With Intel's Albert Yu Alcatel Shares Dive On Gloomy Outlook Mentor To Try To Oust Quickturn's Board Print this story Send as e-mail =See our Tech Encyclopedia for more info. Visit CMPnet Bookstore