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
"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 email@example.com.
Copyright 2005 San Francisco Chronicle
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