Qwest Blocks SBC And AT&T?

Of course it should be obvious to anyone that VoIP is wreaking havoc on service providers. This technology had two false starts but is so entrenched now that service providers are rethinking how they will exist in the future. There is safety in numbers it seems and this is why we are seeing carriers herd together in smaller groups that eventually merge together.

But in the end consumers don’t benefit when service providers get too strong. This is exactly what Qwest is telling the FCC as they petition the government body to block the proposed merger of SBC and AT&T.

SBC has many reasons to initiate this acquisition not the least of which is reducing a powerful lobbying opponent from the industry. AT&T is one of the companies that fought tirelessly against the RBOC monopoly in the interest of consumers. AT&T did this because it was smart business for the NJ based telephone giant and in this case their interests were the same as Joe six-pack.

Here is part of the Qwest release on the matter:

"To protect the public, it is essential that if the merger application is not denied outright, then the FCC must condition its approval, at a minimum, on significant divestitures of facilities and other related overlapping operations in SBC’s 13-state operating territory. In addition, because the proposed merged company will benefit from the elimination of AT&T as a competitor — and benefit from the elimination of other competitors’ access to AT&T’s wholesale services and access facilities — other significant conditions must be imposed in order to attempt to level the playing field."

On the heels of the Qwest release, an opposing announcement arrived from the Communications Workers of America, available at:

SBC-AT&T Merger Merits Quick Approval, CWA Tells FCC

According to CWA, SBC-AT&T merger will (with my comments in red):

Create a "premier U.S. communications company," with the ability to "expand the delivery of advanced technologies, services and features to all classes of customers."

"Create a company with the resources and end-to-end network essential in the deployment of advanced next-generation Internet-Protocol enabled networks and services."

They don’t need to merge to do this.

Assure that "national security will be safeguarded, by ensuring that AT&T, on which the government heavily depends for national security and other needs, will be a strong American company."

Interesting perspective but the government can just block foreign purchasers of AT&T and SBC could just as easily be acquired by a foreign corporation, right?

"Enhance, not reduce, competition by combining the different strengths of the two merger partners — AT&T’s global network and research innovation and SBC’s financial strength and local exchange, broadband and wireless capabilities."

I am at a loss to understand how a merger enhances competition. AT&T’s CallVantage was a strong competitor to SBC’s phone service and the service had the added benefit of having the AT&T name behind it. The service is now apparently shelved – well not really shelved but I have yet to hear CallVantage being mentioned prominently since the merger was announced.

"Provide employees at both companies with the opportunity to share in the growth of the merged entity rather than the job loss that has been the fate of all too many AT&T employees in recent years."

I know a number of people who have their resumes ready at AT&T now that this merger was announced. Again, isnt it obvious that mergers create job loss and reduce competition?

Maybe I don’t have the smarts to understand why this merger id good for consumers. Nothing I have read to date convinces me that consumers have anything to gain.

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