Expert Comment on FCC Decision to Delay Vote on AT&T-BellSouth Merger

Published November 6, 2006

(Chicago, Illinois – November 6, 2006) The FCC announced on November 2 it would delay once again making a final decision on the proposed merger of AT&T and BellSouth.

The statement below is from Steven Titch, The Heartland Institute’s senior fellow for information technology and telecom and managing editor of its monthly publication, IT&T News. Titch can be reached at 281/571-4322 or via email at [email protected].

“The Federal Communications Commission’s decision to delay approval of the AT&T-BellSouth merger for a second time is extremely disappointing.

“While Americans hunger for more video and broadband competition, the FCC is bogged down in yesterday’s debate–whether a combined AT&T-BellSouth will dominate the shrinking segment of old-fashioned voice telephony, a twentieth century service that grows less appealing and less functional each day.

“In focusing on the companies’ legacies in old voice services, the FCC demonstrates a woeful misunderstanding of the reasons for this merger. Companies who provide the last mile of broadband connectivity should have the same opportunity to excel as the dozens of other large companies who comprise the broadband supply chain. Customers of AT&T and BellSouth stand to benefit enormously from the merger because the combined company will match the size and scope of other integrated cable, phone, and Internet providers such as Verizon, Comcast and Time Warner, Cox, EarthLink, and AOL. The FCC also forgets that application powerhouses like Google and e-commerce giants such as are as much a part of this industry as AT&T and BellSouth.

“Two weeks ago, the FCC was raising questions about network neutrality. Now, commissioners have raised a sudden new concern about reducing the number of companies that offer basic switched voice services. It is true AT&T once monopolized voice service through a government-sanctioned monopoly. That was before the emergence of the Internet, cell phones, cable telephony, and WiFi.

“This latest FCC objection seems rooted in a narrow, flawed report that merger opponents submitted two weeks ago–a report that ignored the effect of the Internet and wireless on traditional voice service, as well as the vibrant market for integrated phone, high-speed Internet, and cable services. In fact, the terms “Internet” and “cable TV” do not even appear in the 22-page document that purports to be a scholarly analysis on the state of U.S. telecom competition.

“It’s time for the FCC to catch up with all the other agencies that have reviewed and approved this merger, including the Department of Justice and Public Service Commissions in nine states, and approve the merger between AT&T and BellSouth.”

Steven Titch is The Heartland Institute’s senior fellow for telecom and information technology and managing editor of its monthly publication, IT&T News. He can be reached at 281/571-4322 or via email at [email protected]. For more information about The Heartland Institute call Michael Van Winkle at 312/377-4000 or email [email protected].