AT&T-BellSouth Merger Will Strengthen Competition

Published August 14, 2006

Dear Editor:

Your August 8 editorial, “PSC must exert its authority in BellSouth-AT&T buyout,” gave an accurate-enough history of the AT&T divestiture until the point you wrote, “The old AT&T behemoth will have returned, and quite frankly, there isn’t another company that can stand up to it.”

This statement overlooks the size and market presence of Comcast, Time Warner Cable, and Georgia’s own Cox Communications and EarthLink. Between the cable companies, national Internet service providers, and wireless companies, BellSouth has lost some 3.6 million access lines since 2001, while struggling to match the breadth of services that the cable companies can package.

Then there are Google and eBay, two huge companies that did not exist at the time of divestiture. With a market capitalization of $115 billion and flush with cash, there is no area of broadband telecommunications Google isn’t exploring, from wireless data service to content aggregation. Online auction giant eBay purchased Skype, the Internet telephony pioneer, for $2.6 billion. All of these companies have successfully “stood up” to divested AT&T companies all over the country.

Never has there been a greater choice of phone service providers. That’s why–even though AT&T and seven “Baby Bells” have re-consolidated over the past several years–phone service has never been so inexpensive.

The same competition that is driving down prices is driving the AT&T-BellSouth merger. The geographically fragmented industry created more than 20 years ago by judicial decree is not economically viable. Using regulation to block necessary business changes in response to changing market conditions, as the Macon Telegraph advocates, hurts more than it helps.

Consumers in Georgia will benefit from the AT&T-BellSouth merger because it will strengthen a major telecommunications company in the region on which many consumers and businesses still depend. BellSouth customers will benefit from AT&T’s national footprint, streamlined economies of scale, and its strategy for future services, which include integrated video service. All this will translate into lower prices, more innovation, and more service choices than BellSouth could accomplish as a stand-alone company.


Steven Titch
[email protected]

Steven Titch ([email protected]) is senior fellow for IT and telecom policy with the Chicago-based Heartland Institute and managing editor of its monthly publication, IT&T News. Institute.