RealTime IT News

New Working Group Objects to Telecom Mergers

The imminent mergers of Verizon/MCI and SBC/AT&T have become the targets of six competitive carriers and customers who say they threaten the benefits that businesses and consumers enjoy as a result of competitive choice.

XO Communications, Savvis Communications, Eschelon Telecom, Cbeyond Communications, Covad Communications and Broadwing Communications announced today they formed a working group to challenge the Verizon/MCI and SBC/AT&T mergers.

The six companies designated an "expert team," which consists of former FCC Chief Economist Simon Wilkie, antitrust litigator Gary Reback, former FCC General Counsel Christopher Wright, and Brad Mutschelknaus, founder of The Telecommunications Practice Group, Kelley Drye & Warren LLP.

"These combinations produce less, not more, competition," said Carl Grivner, CEO of XO Communications, in a statement. "By removing AT&T and MCI from the market, the Bell companies have removed their major competition in business markets, as well as the mass market for local voice and data services."

The telecom industry is finally consolidating, movement that has been in the works for some time. Cable operators, Voice over IP upstarts and wireless carriers tapped into AT&T and MCI's long-distance customer base. Facing extinction, the companies opted for merger rather than a slow demise.

But not all in the telecom industry consider the mergers preventative. Jim Geiger, CEO of Cbeyond, said AT&T and MCI competed with SBC and Verizon on every telecom level and were able to regulate the giants' potential monopoly power.

"These two deals represent a tectonic shift in the telecommunications ecosystem and require the highest level of scrutiny by the government officials reviewing them," said Geiger in a statement. "In many cases, AT&T and MCI provided wholesale services to new, cutting-edge carriers serving the small business and consumer markets. Strong oversight is necessary to ensure continuing checks on the use and potential abuse of monopoly local facilities."

According to a statement, the working group intends to present information and analyses to the Department of Justice and the FCC, as the government agencies evaluate the consequences of the mergers.