[Congressional Record (Bound Edition), Volume 152 (2006), Part 3]
[Senate]
[Page 3908]
[From the U.S. Government Publishing Office, www.gpo.gov]




               PROPOSED MERGER BETWEEN AT&T AND BELLSOUTH

  Mr. DORGAN. The proposed merger between AT&T and BellSouth is 
controversial. The proposal should trigger a serious evaluation by both 
the Justice Department and the Federal Communications Commission.
  A recent column in the March 20 issue of Business Week by Leo Hindery 
caught my eye, and I want to share it with my colleagues. I don't 
necessarily share all of his conclusions, but I think his perspective 
is an interesting one. I hope that others will weigh in as we try to 
make a judgment about whether this proposed merger is in the interest 
of the American people.
  For me, it remains an open question whether this merger should be 
allowed. In the meantime, it is useful to hear many different 
perspectives about it and I wanted to share Leo Hindery's column with 
my colleagues.
  I ask unanimous consent to print the column in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                  [From Business Week, Mar. 20, 2006]

                           Ideas Outside Shot

                          (By Leo Hindery Jr.)

       Watch This Hookup Closely. Who says you can't put Humpty 
     Dumpty together again? With AT&T's acquisition of BellSouth, 
     Ma Bell will (almost) be back. The stated justifications for 
     this huge new merger are to save $2 billion a year in 
     expenses on a $120 billion combined revenue base and, says 
     Chief Executive Edward E. Whitacre Jr., to enable the 
     combined company to ``have more products, better services, 
     and better prices.''
       Unfortunately, neither justification is likely to pan out, 
     and there is not one product or service that AT&T will have 
     with BellSouth that it could not have had without it. Not 
     one. So the only real advantages from this merger for AT&T 
     shareholders are a clarified management structure at the two 
     companies' Cingular cellular joint venture and probably 
     slightly faster rollout of wireless Internet calling. Those 
     two changes are certainly important, but they're not nearly 
     desirable enough to allow this merger to proceed without 
     regulators imposing some very tough conditions.
       I'm so skeptical because every time a major cable-systems 
     merger was proposed in the past, the justifications were 
     essentially the same: modest cost savings that would fuel 
     more services and better prices for consumers. But those 
     never materialized. Why not? Once a telco or major cable 
     company has achieved scale, and they all have by now, these 
     purported justifications become ludicrous, especially when 
     (as with AT&T and BellSouth) there is little or no 
     preexisting overlap of their service areas.
       As a businessman and former cable operator, I can 
     appreciate Mr. Whitacre's desire to bulk up to better compete 
     in both traditional telephony and newer growth areas like 
     broadband video distribution. Not only is he battling stiff 
     competition in voice-over-Internet telephony from the likes 
     of Vonage, Google, and Skype, but he also faces an array of 
     newer delivery technologies such as Wi-Fi, WiMAX, and 
     broadband over power lines. Then there are the major cable 
     companies, which are deeply entrenched in video distribution 
     and have the huge advantage of vertically owning much (in 
     fact, way too much) of the nation's programming.
       But the telcos and cable already have virtual strangleholds 
     over wire-line access. (A combined AT&T and BellSouth would 
     control 71 million local phone customers in 22 states.) So 
     this proposed megamerger will be devastating for consumers 
     unless some strong limitations are put on the merged company 
     in two areas: bundling and pricing practices and ``Internet 
     neutrality.''
       Indeed, with broadband soon to be AT&T's (and all other 
     significant distributors') major offering, the Bush 
     Administration and the Federal Communications Commission must 
     stand up for consumers and insist that AT&T, Verizon, Qwest, 
     and cable operators not layer on to their broadband services 
     unreasonable user surcharges and ``speed controls'' that 
     favor one service provider over another. Such acts would 
     crimp consumers' access to the Net and give distributors 
     unwarranted monopoly-like profits and controls. Likewise, 
     regulators must restrict discriminatory bundling and 
     predatory pricing, which limit consumer choice, in both 
     services and content.
       That's not to say that regulators should crack down only on 
     telcos. Washington should give AT&T, Verizon, and Qwest 
     nationwide video-transmission rights so they can compete 
     sooner and better with cable in video distribution. And it 
     must end the vice grip of vertical integration that allows 
     programming owned by a distributor (especially cable 
     operators) to be treated more favorably than independent 
     programming. Such vertical integration, when abused; is a 
     fraud on consumers and an impediment to competition. It needs 
     to be restrained, and Mr. Whitacre should demand that as a 
     quid pro quo for the limits that are sure to be imposed on 
     his proposed deal.
       So let Mr. Whitacre have his merger--heck, the 
     Administration and the FCC let Comcast acquire AT&T Broadband 
     in 2002 without blinking an eye. But let's hold him to his 
     promise of ``more products, better services, and better 
     prices.'' Given the grave potential for abuse to consumers by 
     those with quasi-monopoly power, the Administration, the FCC, 
     and Congress must impose appropriate restrictions on the 
     AT&T-BellSouth merger.

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