The Federal Communications Commission (FCC) Monday approved two huge telephone mergers with limited conditions in the belief new technologies...
WASHINGTON — The Federal Communications Commission (FCC) Monday approved two huge telephone mergers with limited conditions in the belief new technologies will give consumers and businesses choice in an industry that is rapidly consolidating into a few big players.
By allowing SBC Communications to buy AT&T and Verizon Communications to buy MCI, federal regulators are essentially closing the book on a decadelong experiment in which they had hoped local and long-distance companies would compete head-to-head for each other’s business.
Instead, regulators believe residential customers as well as businesses will be able to get service from cable, wireless and Internet phone companies that have all begun to provide substitutes to standard phone service.
Prodded by the FCC’s two Democrats, the agency froze wholesale prices for 2-½ years for certain business customers.
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To help consumers, it also required the companies to sell high-speed Internet access without tying it to phone service and sought protections to ensure they allow customers unfettered access to the Web and competing offerings like Internet phone service.
Most state regulatory agencies already have sanctioned the unions, although several more still are needed.
FCC Chairman Kevin Martin had wanted the mergers approved without conditions. Martin postponed a vote scheduled for Friday and continued negotiations during the weekend to work out a deal.
Qwest, which had engaged in a three-month bidding war for MCI, praised the FCC conditions. These “actions will increase the likelihood that other firms will be able to fill the competitive gap created by the elimination of AT&T and MCI,” the company said.
Consumer groups and smaller communications companies that now must vie against the Goliaths of the telephone industry argued that the conditions were minimal and the mergers would raise prices.
“The conditions ‘won’ by the Democratic commissioners are mere fig leaves designed to give the appearance of consumer protection,” said Earl Comstock, president of the Comptel trade group that represents smaller telecom firms.
“These conditions are not nearly enough,” said Mark Cooper, research director at the Consumer Federation of America.
Cooper said Martin’s “failure to agree to meaningful protections against pricing abuse means competitors can be squeezed out of the market and consumers face price increases.”
Information on state regulators, FCC Chairman Martin and Qwest’s reaction provided by The Associated Press.