Consumer advocate Ralph Nader is asking
Federal Communications Commission chairman
William Kennard to hold public hearings on the potentially harmful effects
of AT&T's proposed $48 billion buyout of
Tele-Communications Incorporated.
"Given AT&T's history in anticompetitive actions, and TCI's enormous
reputation for anticompetitive actions in the cable television market, it
is prudent to expect bundling strategies to be used in anticompetitive ways
against rivals," Nader wrote in a letter sent to Kennard today.
"We ask that the commission schedule public hearings to discuss and debate these and other aspects of the proposed merger," Nader added.
AT&T and TCI announced their proposed merger Wednesday. Under
the deal--which is still subject to approval by the FCC and either the Justice Department or the Federal Trade Commission--AT&T
would combine its long distance, wireless, and Internet services with TCI's
cable, telecommunications, and high-speed Internet business to create AT&T
Consumer Services, a new subsidiary that essentially would serve as a
one-stop shop for communications.
In his letter, Nader, who is affiliated with the Consumer Project on Technology, told
Kennard that his organization is "surprised to read that you have already
issued several positive comments on the proposed merger." He added that the
deal could lead to a system in which the companies bundle myriad products
and services, having "the effect of binding the consumer to the monopolist
for several goods."
Interestingly, Nader contended, TCI chairman John Malone has "indicated the
plan was for AT&T to be involved in a much broader array of consumer
purchases, including, Mr. Malone said, such products as [potency
drug] Viagra, through a planned 'front end' interface to the Internet
and electronic commerce."
Allowing the merged company to bundle an increasing number of services and
products "permits the firm to extend its monopoly in one market to others,"
Nader wrote.
Representatives from the FCC, AT&T, and TCI were not immediately available
for comment yesterday on Nader's letter. One day after the deal was
announced, however, Kennard told a group of communications lawyers that the
merger was "eminently thinkable, but only if there are tangible consumer
benefits." He added that he hoped the merged company would bring high-speed
Internet access to U.S. consumers and said his commission would be
reviewing the deal.
In announcing the deal Wednesday, Malone said it was "exactly what the
federal government had in mind when it passed" the Telecommunications Act
of 1996. The legislation was designed to create competition in the cable
television, long distance service, and local phone markets by making it
easier for companies to enter into their competitors' turf.
Nader also noted that the AT&T-TCI deal is just one of many troubling
unions that has been forged between communications and media companies over
the last year or so. "As the number of firms dwindles and firms become
entangled in alliances, joint ventures, or mergers, debate narrows," Nader
wrote. "At a certain point of inbreeding, the genetic stock begins to
suffer, along with the vigor of competition in innovation."
Nader said that other examples of such alliances include a Bell Atlantic executive sitting on
the board of Compaq Computer, an ISDN
videoconferencing deal that makes Intel
beholden to Pacific Bell, and joint
ventures between TCI and Time Warner.