Heartland Statement on the Speculation of an SBC and AT&T Merger

Published January 27, 2005

(Chicago, IL) Earlier today, both the Wall Street Journal and New York Times reported that SBC and AT&T are considering some sort of merger. While everything reported seems speculative, a deal between the two companies could have a positive impact on the telecommunications industry.

Steve Titch, senior fellow for technology issues for The Heartland Institute and managing editor of Heartland’s monthly newsletter, Information Technology & Telecommunication News, had the following to say on the subject:

News reports today suggest SBC and AT&T may be contemplating the next mega-merger in the telecommunications industry. This has critics–of the industry in particular and free markets in general–in a frenzy.

They need to calm down. If this merger in fact moves forward – which is in and of itself far from certain, it would probably be good for consumers and investors alike. Regulators and elected officials ought to stay as far away from this development as the law allows.

A combination of AT&T and SBC is not about reconstituting the old Bell System; it is about simplifying home technology for consumers. Look into American homes today and you’ll find a truckload of cable, computers, wireless and wireline phones, PDAs, DVD players, cable boxes, and game systems. Consumers want to manage these devices and applications simply and centrally.

Legislators and antitrust officials should carefully consider the impact that blocking mergers like this would have on progress toward networked applications in the home. They also should ask whether it makes sense to block this merger on the basis of distinctions between local, long distance, wireline, wireless, voice, and data transmission that, from a consumer perspective, are now obsolete. They should look beyond the past history of each company and at how a combined company can offer consumers what they want today.

Consumers know what they want, and they are growing increasingly frustrated with what they see as arbitrary rules that force them to deal with multiple providers, keep track of multiple remotes, and, most of all, spread household funds among several providers rather than save money by integrating with one.

Legislators who insist on doing everything they can to block this deal risk a backlash from overcabled, overconnected and, bottom line, overpaying voters. At the end of the day, those voters will demand to know what, exactly, they are being protected from.

Steven Titch is senior fellow for information technology and telecom issues for The Heartland Institute, a 20-year-old nonprofit research organization based in Chicago. He also is managing editor if IT&T News, a Heartland publication. He can be reached at [email protected].