FCC questions telco megamergers

The Federal Communication Commission's Gloria Tristani says she has strong reservations about several telephone company megamergers now up for FCC approval.

"I'm somewhat skeptical of the proposed mergers between major [local telephone companies]," commissioner Tristani said, speaking Sunday at the annual meeting of the National Association of Regulatory Utility Commissioners in Orlando, Florida.

Tristani and her fellow commissioners are charged with giving a green or red light to mergers between Bell Atlantic and GTE, along with SBC Communications and Ameritech.

Bell Atlantic has already merged with Nynex, one of the other seven original Baby Bell companies created by the breakup of AT&T in 1984. SBC Communications owns Pacific Bell, Nevada Bell, and Cellular One.

Critics of the two mergers have said the unions would create giant companies easily able to crush competition at the local level. Competitors, along with consumer groups, have loudly opposed the mergers, both at the federal level and in several states that are reviewing the deals.

"The SBC/Ameritech merger--along with the proposed Bell Atlantic/GTE merger --should be of dire concern to everyone in America because we could be faced with two giant corporations owning more than two-thirds of the nation's telephone lines," said Sprint vice president of state external affairs Ellen D'Amato, in a petition to Wisconsin state regulators today.

"Essentially, Americans would be at the mercy of a Bell East and a Bell West monopoly,'' D'Amato added.

Both companies have said they need to expand in order to compete in an increasingly global marketplace. Baby Bells claim they need the benefits of merged resources in order to go head-to-head with foreign companies and established long distance carriers outside their traditional service areas.

But Tristani said she isn't convinced.

"In all candor, I'm a little skeptical of the notion that a $25 billion company needs to get bigger before it can compete successfully out-of-region," she said, focusing on SBC's statements in support of its merger.

SBC has said it will increase local competition by entering the nation's top 30 markets not already in its service area, if the Ameritech merger is approved. Tristani noted that all of those markets already have some competition provided by outside companies. "Why not go and compete for that money now?" she asked.

In the same speech, the commissioner said she did not have as many reservations about the pending merger between AT&T and cable giant TCI, although she promised to reserve final judgement until the FCC staff had finished its review.

"There are clearly some upsides to this merger," she said. "It could be an opportunity to stimulate competition in the residential market by giving TCI specialized expertise, greater financial resources, and a trusted brand name."

Despite a growing move in Congress to scale back the FCC's role in approving and modifying mergers like these, Tristani said she believed the Commission would play a critical role over the next several years.

"In the two and a half years since the 1996 [Telecommunications] Act passed, I'm concerned that consumers have seen more changes for the worse in telecommunications than for the better," Tristani said. "If there ever were a time for the Commission to ensure that consumers' interests don't take a back seat to the interests of telecom giants, it is now."