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AT&T Plans BellSouth Acquisition

Consumer Groups Cry Foul, Warn of More "Lifeless Competition"

March 5, 2006

AT&T • Slamming • Long Distance • Local • Wireless • Broadband • Telemarketers --- News • AT&T Agrees to Refund Some Ringtone Charges • States Asked to Probe AT&T U-Verse Explosions • AT&T Exits Pay Phone Business • AT&T Changes Contract Policy • AT&T Changes Terms Of Service After Outcry • AT&T Agrees to New Stolen Cell Phone Rules • AT&T Stiffens Language Covering Objectionable Content • AT&T Adds Parental Controls To Mobile Phones • AT&T Slammed Over Rebate Policies • Appeals Court Shreds AT&T Arbitration Clause • Court OKs Rebate Lawsuit against Cingular/AT&T • AT&T Trashes Cingular Brand • AT&T Offers Net Neutrality Concessions To Win Merger Approval • FCC Delays Decision On AT&T/BellSouth Deal • Justice Department Green Lights AT&T-BellSouth Merger • FCC Clears the Way for AT&T-BellSouth Merger • AT&T Trumpets New TV Service • AT&T Web Site Hacked; Customer Data Exposed • AT&T Sues Calling Record Brokers • AT&T Declares Consumers' Personal Data "Corporate Property" • AT&T Plans to Kill Cingular Name • Report: AT&T Acquiring BellSouth • SBC Recast as AT&T • FCC approves AT&T, MCI Deals • Justice Dept. OKs AT&T, MCI Sell-Outs • SBC Will Keep AT&T Name • Consumer Groups Oppose Big Telco Mergers • SBC Buys AT&T • AT&T Will Pay Refunds to New Yorkers • AT&T Will Pull Out of 7 States • AT&T Teams With Sprint to Return to Wireless Business • Minnesota Sues AT&T • Class Action Charges AT&T With Slamming • Another AT&T Rate Hike • AT&T Hiking Minimum Fees • AT&T Faces $780,000 Do-Not-Call Fine • AT&T Will Run Do-Not-Call List • Supreme Court Denies AT&T's Appeal of Arbitration Ruling

AT&T, recently gobbled up by SBC Communications, is reportedly in the process of acquiring BellSouth, as the consolidation of the telecommunications industry, broken up by court order in 1984, continues.

Consumer groups were quick to denounce the proposed transaction.

"Congress and federal regulators need to look carefully at the lifeless 'competition' their flawed policies have created and reject this merger," said Gene Kimmelman, vice president for federal and international affairs for Consumers Union.

"The government has been deceived before by promises that somehow more concentration would produce more choices and competition, when the result has been just the opposite. It shouldn't be fooled again."

"If approved, this merger will lead to higher local, long distance and cell phone prices for consumers across the country," Kimmelman added. He said the impact would be particularly devastating on consumers from the Carolinas to Florida and across the Southeastern U.S. where AT&T will no longer compete with BellSouth's regional near-monopoly for telephone and DSL services.

Kimmelman said that if the government refuses to stand in the way of the recreation of the old telephone monopoly, it should at least require the merging companies to sell their Cingular wireless business to create more opportunities for competition between wireless and wireline services.

Despite claims that the merger might foster competition between phone companies and cable giants, cable companies are just now entering the phone market and are not yet positioned to compete with the national phone duopoly that will exist if the merger is approved, Kimmelman said.

The only other potential competitor -- voice-over-internet phone service (VOIP) -- which relies on broadband connections, is threatened by the ability of the Bells and cable companies who own broadband wires to disrupt their VOIP transmissions.

Consumer Federation of America joined Consumers Union in calling on the Department of Justice to reject the merger.

"Telecommunications has now gone from a regulated monopoly to an unregulated duopoly with just two major players," said Mark Cooper, director of consumer research for CFA.

"Consumers know that is not enough competition to lower their prices and drive innovation, especially when the two companies providing Internet access have a long history of anti-competitive, anti-consumer behavior."

Cooper added that as the government has encouraged concentration in these telecommunications industries, it has closed the door on robust competition in high-speed Internet by allowing phone and cable companies to prevent competitors from using their wires to offer an alternative broadband provider.

"Broadband was one of the few remaining opportunities for competition in telephone service," Cooper said. "Now that door has been closed. If Justice now approves this merger, it slams yet another door."

According to the reports AT&T would pay close to $65 billion for BellSouth, which serves the southeastern U.S. That price would represent a significant premium for BellSouth stockholders.

SBC Communications last year acquired AT&T, a disgraced company reeling from lawsuits and declining market share. Despite those negatives, SBC decided to adopt the AT&T brand for marketing purposes.

In response, Verizon acquired MCI, which had been AT&T's primary competitor in the long-distance business.

Some industry analysts have long predicted a reconsolidation of the industry, whose much heralded breakup was supposed to foster competition and lower prices. A merger of AT&T and Bell South would be a rather large step in that direction.

Cingular Wireless, owned jointly by Bell South and AT&T, would be part of the new combined company as well.

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