By James R. Hood
ConsumerAffairs.com
October 28, 2005
The Justice Department has given its blessing to the purchase of MCI by Verizon and AT&T by SBC, with the Federal Communications Commission expected to do the same, possibly as early as today.
The two deals, totaling more than $24 billion, come close to putting the telephone industry back together again.
It was a Justice Department antitrust suit that, back in 1984, led a federal judge to order the break-up of AT&T into separate long-distance and local units. Now the two biggest long-distance carriers will be owned by the two biggest local companies, which have already devoured most of the other "Baby Bells."
The only thing that has changed is that the telephone business isn't what it used to be. Consumers are choosing wireless over wired phones and millions more are getting their phone service from their cable television provider.
SBC is hoping the AT&T name helps it sell more data transmission and long-distance service to big business customers. Verizon's purchase of MCI is seen as largely defensive; if SBC has a long-distance company, this reasoning goes, then Verizon needs one too. Never mind that both companies already successfully sell long-distance service to their customers.
To protect competition, the Justice Department said it will require both Verizon and SBC to sell some high-volume business lines in 19 cities where it found significant antitrust problems.
The FCC is likely to make a few stipulations as well, intended mostly to protect consumers and ensure open Internet access.
Major business customers aren't jumping with joy over the deal, which they think is almost certain to raise prices.
The Justice Department is requiring the companies to divest their connections to more than 350 buildings in such major markets as New York, Washington and Los Angeles. The FCC may require the companies to sell Internet access to customers who don't have traditional local telephone service.
