Telecom Scores Merger Success — With Strings Attached

Washington, D.C., October 31, 2005—The Competitive Enterprise Institute welcomes the Federal Communications Commission’s decision approving the two major telecommunications mergers. Unfortunately, the conditions imposed by the Commission indicate an unhealthy skepticism toward the expanding communications market.<?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />

The mergers of SBC Communications with AT&T and of Verizon Communications with MCI were approved this morning in a vote by FCC commissioners. CEI previously filed formal comments on the impacts of both the SBC and Verizon mergers.

“The FCC should be congratulated for approving these mergers,” said Technology Counsel Braden Cox. “However, the Commission’s conditions forcing unbundled DSL, regulating wholesale rates and freezing current arrangements for exchanging traffic still reflect a narrow perspective of competition. Rapid developments in technology, along with an environment where cable, telephone, and wireless companies all compete against each other, will help ensure competition in the industry. The conditions are unnecessary burdens to the potential gains these mergers create. Synergies delayed are consumer benefits denied.”

CEI believes regulators need to reassess the role of antitrust and allow the marketplace to guide the future of communications technology. “The acquisitions of AT&T and MCI by SBC and Verizon have stoked unwarranted fears of market domination,” said Cox, “while ignoring the fact that the various forms of content delivered over multiple and competing communications networks guarantees that the merged entities will face a competitive marketplace.”

The long wait in obtaining approval for the mergers also reflects the consequences of operating with a vacancy on the Commission, which has hampered its ability to move forward with key decisions over the past six months. “While we understand that the President has many other priorities, it is long overdue for the White House to put forward a candidate who will help guide the FCC toward much needed free market reforms,” said Cox.