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Monday, January 31, 2005

SBC-AT&T Merger: There they go again . . .
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There is much about the proposed SBC-AT&T merger that is not particularly surprising. Predictions of approval aside, the "vertical" aspects of these combinations can bring consumer benefits, encouraging companies to provide better bundles of services more cheaply, as I have suggested previously. And a huge goal of the 1996 Act under section 271 was to promote competition by removing restictions on phone companies that existed when the government broke up "Ma Bell." These former restrictions would have made this deal patently illegal a few years ago.

Equally unsurprising -- but more troubling -- are the quick, unequivocal objections to the deal from those purporting to represent consumers.

As with any transaction of such prominent market players, the deal will require rigorous review to ensure the combination presents no unreasonable risk of harm to competition or, thereby, to consumers. But characterizing the deal as "re-monopolization" or failing to note its potential consumer benefits among any perceived risks seems more geared toward generating press quotes than representing consumers' interests. This approach also ignores the dramatic improvements in competitive choices made possible not through regulation but through its absence, which has jumpstarted investment in such services as cable modems and DSL, mobile wireless, WiFi and Internet voice. Given past behavior, the conspicuous omission of such real-world considerations from supposed "consumer" assessments is not unexpected, but it is sadly ironic, even for those angling to be the sole advocates for consumer welfare.

Consumer "champions" do get one thing right, however: they suggest the proposed merger illustrates the need for fundamental change in communications regulation. Of course, what they really mean is that the deal signals the need to reverse course on deregulation to prevent what (amorphously) might be termed "bigness." Instead, the deal is more notable for showing how regulation based on outdated categories of service (e.g., local vs. long distance phone service) no longer works given the emergence of competing digital technologies.

Right answer, wrong reason, but at least it's a start.

posted by Kyle Dixon @ 2:34 PM | Communications

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