Higher bills unlikely even with latest telephone merger
By Bruce Meyerson
NEW YORK -- After three big mergers over the past two months in the rapidly consolidating telephone industry, consumer advocates are nervous that phone bills might rise.
But the rule that less competition leads to higher prices isn't so clear-cut in a telecom landscape altered by people gabbing on cell phones at home, and plugging their old landline phones into Internet modems -- talking while they watch cable TV.
"I doubt any of these deals will have an adverse affect on residential customers," said Robert C. Atkinson, director of policy research at the Columbia Institute for Tele-Information at Columbia University. "With cable companies and wireless companies, there's plenty of options coming. There will be plenty of opportunities to succeed or fail."
The latest merger -- Verizon Communications Inc.'s purchase of MCI Inc. on Monday for $6.7 billion in cash and stock -- was the third big telecom merger since December.
With AT&T; Corp. being acquired by SBC Communications Inc. in a $16 billion deal announced two weeks ago, two companies that ruled the long-distance market until recently are now due to disappear. Sprint Corp. said two months ago it would pay $35 billion for Nextel Communications Inc.
Once the deals close, a process that may not be completed until mid-2006, an industry once dominated by 10 names will be reduced to the Big Four -- Verizon, SBC, BellSouth Corp. and Sprint Nextel.
A key catalyst for all three deals was a court ruling nearly a year ago and subsequent decisions by the Federal Communications Commission that severely weakened the business prospects of AT&T,; MCI and Sprint, prompting those companies to seek strength through mergers.