CFA SAYS AT&T-CINGULAR MERGER THREAT TO WIRELINE COMPETITION
The Consumer Federation of America renewed its attack on the Cingular-AT&T Wireless merger, arguing in a white paper that the Justice Dept. should reject the merger because it will hurt local telephone competition. The paper draws a connection between the potential effect on wireless competition and growing concerns about telecom prices with the phase-out of the UNE-P and resulting departure of CLECs from some markets.
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The paper comes with the merger under tight regulatory scrutiny (CD July 20 p.1). One issue likely to get attention, especially at DoJ, is whether the combined companies should have to divest customers or spectrum licenses to address concerns in specific markets. The paper by Mark Cooper, CFA dir.-research, argues that the issues raised are especially acute with AT&T’s retreat from residential markets, announced last week. Cooper notes that the decision by the Administration not to appeal the Triennial Review Order places increased pressure on VoIP and wireless to compete with Bell landline operations.
The group said since SBC and BellSouth own Cingular the merger could prove “another anticompetitive blow to consumers,” removing “the largest unaffiliated competitor from the wireless market.” CFA stressed the potential impact of the merger on wireline-wireless competition: “SBC and Bell South as the dominant wireless and landline providers will have little incentive to migrate customers off of landline service.” CFA also argued that the merger increases the incentives for higher wireless prices.
CFA also directly called on DoJ to order divestiture of spectrum in most markets if the merger is approved. “Separately Cingular and AT&T Wireless have more spectrum today than many of the other wireless license holders,” CFA said. “Combined they will have a dominant holding of spectrum in many markets.”
CFA said that if landline and wireless services are combined in a market for local telephone connectivity the market share owned by Cingular and its parents would violate DoJ merger guidelines “by a mile.” CFA also pointed out that the wireless market has already seen major consolidation, with the top 6 carriers controlling 85% today, compared to 55% in 1997: “Nationally, Cingular would be 50% larger than Verizon and dwarf the few other national wireless carriers.”