Objections to telephone merger filed Consumer, industry groups protest SBC purchase of AT&T Ryan Kim, Chronicle Staff Writer
The proposed marriage of telecom titans SBC and AT&T would eliminate competition on the wholesale market and could lead to increased prices for business and residential customers, corporate rivals and consumer groups argued in briefs filed on Friday.
In written testimony presented to the California Public Utility Commission, critics of the planned merger spelled out why the deal would be bad for ratepayers and what conditions should be imposed to limit its negative impacts.
SBC, the dominant local telephone company, is seeking to acquire long- distance carrier AT&T in a $16 billion deal that would create the nation's largest telecommunications company. The commission, which is taking testimony in the case, is expected to rule on the application by the end of the year.
The California Association of Competitive Telecommunications Companies, which represents more than 30 companies, has not formally opposed the merger but has pushed for measures to ensure continued competition in the business market.
In its filings, the group urged the commission to consider caps to lock in wholesale prices for telecom competitors. AT&T and SBC compete to lease access to smaller telecom companies which, in turn, sell their services to local businesses. The group said the price caps would ensure SBC's wholesale prices would not rise dramatically with the loss of AT&T as a competitor.
"The only way that the commission can approve this merger is if it adopts parallel reforms that will enable competition to continue despite the massive resource imbalance the merger will produce," said economist Joseph Gillan, who testified on behalf of the association.
The group also questioned whether SBC would be willing to provide access to its equipment after the merger.
The Utility Reform Network said the merger would adversely affect competition and would not be in the public's interest. The San Francisco consumer group demanded that ratepayers receive an estimated $1 billion in savings by SBC in California if the deal is approved.
SBC spokesman John Britton said the concerns about the merger are unfounded. He said the company, which faces increased competition from cable, wireless and other rivals, wants to provide more services at competitive prices.
"This merger will have tremendous benefits for business and consumers," he said. "The financial strength of a combined SBC and AT&T will mean more investment and faster deployment of new communication technology to more people more quickly."
He said pricing will remain low for ratepayers, while wholesale customers continue to enjoy access to SBC and AT&T's telephone lines and equipment. Britton said SBC and AT&T are not obligated by law to share savings with local ratepayers, but he said the savings in the state would be minimal because there is little overlap in the two systems' infrastructure and staffing.
E-mail Ryan Kim at firstname.lastname@example.org.
Copyright 2005 San Francisco Chronicle
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