Congress Studies Impact Of Telecom Mergers

Executives at the nation's leading telecom companies told Congress this week that the rash of recent mergers will be a boon to consumers. Consumer advocates see it differently.

March 3, 2005

1 Min Read
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As top executives at the nation's leading telecommunications companies told Congress this week that the rash of mergers and acquisitions in their field will be a boon to consumers, leading consumer advocates complained that the acquisitions will be harmful to consumers.

"The mergers mean that the Baby Bells are becoming Baby Behemoths," said Consumers Union Policy Advocate, Kenneth DeGraff, in an interview Thursday. "Dwindling competition leads to higher prices and worse service. There's just no way of getting around that."

The House Energy and Commerce hearings, examining the effects of the Telecommunications Act of 1996, have been looking at proposed acquisitions--of Nextel Communications by Sprint Corp., of AT&T by SBC Communications, and of MCI by Verizon Communications.

The six top executives from those firms argued Wednesday that fewer telecommunications companies would offer more competition, because the survivors would be stronger and better able to develop services.

That concept, however, was challenged by Consumers Union's Gene Kimmelman, who issued a statement saying: "The recent wave of proposed mergers in the telecommunications industry mark the ultimate demise of the era in which consumers could expect more and more choices and lower prices for local, long distance, wireless, and new Internet-based services exploding on the market."Another consumer advocate, Mark Cooper, director of research for the Consumer Federation of America, also objected, saying in a statement: "The merger wave is drowning competition in the communications marketplace. Most Americans today face higher phone bills, fewer choices, and worse service quality as a direct result of the massive industry consolidation we have seen in recent years."

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