Senator calls for antitrust scrutiny of telecom mergers

A U.S. senator influential on telecommunications issues said Tuesday he’s “troubled” about recent announcements of multibillion-dollar telecommunications mergers, saying he will press the U.S. Congress and federal agencies to thoroughly examine the deals’ potential impact on customers.

Senator Conrad Burns, chairman of the Communications Subcommittee of the Senate Commerce, Science and Transportation Committee, said in e-mailed remarks that he’s concerned about the effect of telecom “mega-mergers” on services for rural consumers. Burns is a Republican from Montana.

On Monday, Verizon Communications Inc. announced it has reached an agreement to acquire MCI Inc. in a deal worth US$6.7 billion. The Verizon announcement came two weeks after SBC Communications Inc. said it plans to acquire AT&T Corp. for $16 billion. Both deals are subject to approval by the U.S. Department of Justice, the U.S. Federal Communications Commission (FCC) and multiple state public utilities commissions.

Burns, in an e-mail sent by his staff, said he plans to meet soon with U.S. Attorney General Alberto Gonzales and FCC commissioners “to make sure that proper attention and analysis is given to the potential anticompetitive effects of these massive mergers.”

“I am seriously troubled by the proposed rapid consolidation in the telecommunications marketplace,” Burns said. “Congress has an obligation to give intense scrutiny to these proposed mergers to ensure that the interests of consumers are protected. The twin goals of the 1996 Telecommunications Act were to increase choice in the local and long distance markets and to ensure comparable services at affordable rates to all Americans. I will insist that these goals are not harmed in any way as I examine these proposed mergers.”

Representatives of Verizon and SBC didn’t immediately respond to a request for comments.

Burns is generally concerned about consolidation of the telecom market, and a December announcement that Sprint Corp. plans to merge its wireless operations with Nextel Communications Inc. also deserves congressional scrutiny, in addition to the Verizon and SBC deals, said a Burns spokesman. The senator isn’t calling for regulatory agencies to reject the three deals, but rather suggesting that Congress needs to monitor the potential impact of the deals, the spokesman said.

Burns noted that voice over Internet Protocol and wireless services have brought competition to traditional wireline-based telecom services, and those competitors should be considered in government reviews of the proposed mergers. But many rural areas don’t yet have digital wireless coverage or multiple choices for broadband service, he added.

“The elimination of these gaps should be considered an important element in evaluating these mergers,” Burns said.

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