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REUTERS
Consumer Groups Look to Squash AT&T/BellSouth Deal

March 6, 2006

Groups look to regulators to halt deal, say merger will result in higher local, long-distance and cell phone prices for consumers.

WASHINGTON (Reuters) - Two top consumer groups say they'll urge U.S. antitrust authorities to block telecommunications giant AT&T Inc.'s acquisition of BellSouth Corp., arguing it would lead to higher prices.

Consumers Union and the Consumer Federation of America said Sunday that they would ask the Justice Department's antitrust division to reject the $67 billion deal that would extend AT&T's (Research) reach and solidify its position as the No 1. U.S. telephone company.

"If approved, this merger will lead to higher local, long distance and cell phone prices for consumers across the country," said Gene Kimmelman, vice president for federal and international affairs for Consumers Union.

He argued that the cable industry has yet to emerge as a strong enough competitor to battle the telephone giant and new Internet telephone service is dependent on high-speed Internet connections many customers get from the phone companies.

Kimmelman urged that if the government chose not to block the deal, AT&T and BellSouth (Research) should be required to sell off their Cingular Wireless joint venture. Cingular is the No. 1 wireless carrier in the United States with 54.1 million subscribers.

Together AT&T and BellSouth would hold 69.4 million telephone access lines and serve more than 30 million long-distance customers in states from Florida up to Michigan and out to Texas and California.

"Telecommunications has now gone from a regulated monopoly to an unregulated duopoly with just two major players," said Mark Cooper, director of consumer research for CFA.

The deal must be approved by government antitrust officials and the Federal Communications Commission. Analysts have said they expect the deal to be approved with some conditions similar to those attached to telecommunications deals last year.

"This merger will result in a very competitive company, especially on the wireless side and the video side," said AT&T spokesman Selim Bingol. "We fully anticipate a thorough review and look forward to that process."

Another public interest group urged a condition forcing the companies to ensure customers have unfettered access to the Internet. AT&T has said in the past it would, but also that it was considering charging more for services that use faster, private Internet networks.

"It is vitally important that the Internet remains open and accessible to consumers and to service providers and remains the source of innovation it has been over the past two decades," said Gigi Sohn, president of Public Knowledge.

Rep. Ed Markey, the ranking Democrat on the House Energy and Commerce subcommittee on telecommunications urged close scrutiny of the deal by the government and Congress.

"This merger proposal is one that unquestionably merits the utmost scrutiny by government antitrust officials," he said. "In addition, I believe lawmakers should thoroughly review this merger proposal to fully assess its impact on consumers and competition."

Congressional committees typically hold hearings on major acquisitions, but rarely intervene.


WHAT THE MERGER MEANS TO YOU

© 2006