Top executives of some of the nation's largest phone companies tried to assure lawmakers yesterday that a spate of mega-mergers wouldn't...
WASHINGTON — Top executives of some of the nation’s largest phone companies tried to assure lawmakers yesterday that a spate of mega-mergers wouldn’t harm customers and would help more Americans gain access to technologies like high-speed Internet service.
Skeptics argued that the mergers could lead to less competition and higher prices. “The best value for consumers is a lower price,” Rep. Ed Markey, D-Mass., told the executives at the House Energy and Commerce hearing. “We must keep consumers’ interest first and foremost.”
The six executives sat elbow-to-elbow at a table as lawmakers peppered them with questions about how the multibillion-dollar mergers, which still need regulatory approval, would alter the telecommunications landscape.
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Verizon Chairman Ivan Seidenberg, whose company agreed to buy MCI for $6.75 billion in cash and stock last month, said the deals were the result of an industry restructuring in recent years as new competition emerged from Internet, cable and other companies.
The merged Verizon and MCI will possess the “financial strength and technology resources to deliver the broadband, multimedia world of tomorrow to customers and create economic growth,” said Seidenberg, seated next to MCI president Michael Capellas.
Also testifying were:
The chief executive officers of SBC and former parent AT&T; SBC in January agreed to acquire AT&T for $16 billion to create one of the world’s largest telecom companies.
The CEOs of Sprint and Nextel Communications. Sprint agreed to buy Nextel in a $35 billion deal announced in December, combining the nation’s third- and fifth-largest cellphone carriers.
Modes of communication have changed over the past decade, with Americans increasingly using cellphones at home and using their old land-line outlets to plug into Internet modems. More Americans are logging on to the World Wide Web using high-speed or wireless connections and want access to e-mail and video from cellphones or other wireless devices.
“With an industry that has changed so much in 10 years, it should come as little surprise that companies are looking at one another to determine whether partnerships will enable them to be stronger competitors in the digital world,” said committee chairman Rep. Joe Barton, R-Texas.
The AT&T-SBC coupling would bring advanced, high-speed Internet services to the market “more rapidly, more efficiently and to a wider ranger of customers than either company alone,” said AT&T chairman David Dorman.
Markey asked executives from SBC and Verizon to pledge not to raise prices. Seidenberg declined but said there would be plenty of competition even after industry consolidation.
SBC Chairman Edward Whitacre Jr., said he “cannot pledge that forever” but added: “I don’t foresee that happening.”
The mergers will inevitably lead to higher prices, argued Mark Cooper, research director for the Consumer Federation of America.
“The drumbeat of consolidation and ill-conceived regulatory policies have already undermined” hopes for ongoing and expanding competition, Cooper said.