What was once a market consisting solely of the infamous Ma Bell monopoly — broken up in 1984 — the telecommunications industry has exploded in the past couple of decades with many vendors offering new, competitive low-cost services that now include wireless, satellite, fiber, cable and VoIP, just to name a few.
Undoubtedly, this telecom evolution, a market progression unlike any other, has been a boon to the U.S. economy and great for consumers. The recent news of SBC Communications’ acquisition of AT&T, the next phase of the telecom evolution, will continue the positive trend.
Certainly, naysayers are sure to jump up and down charging the move will be a step backward to the days of Ma Bell and will limit consumer choices. But such charges couldn’t be further from reality.
As Heritage Foundation Research Fellow James Gattuso recently wrote, “The trends leading to [this] deal have been good for consumers and good for the economy. Today’s telecommunications industry is increasingly competitive and diverse. Far from threatening those trends, SBC’s acquisition of AT&T merely underscores them.”
As such, federal regulators charged with reviewing the acquisition should recognize this and approve the deal without delay.
Specifically, the acquisition will enable the stronger company to lead a transition from older technologies to advanced, next-generation Internet-based services that can better address the rapidly evolving needs of businesses and consumers. The spirited competition that will result will mean even lower costs on all products and services to consumers and better customer service all around.
Each company represents an impressive array of products, services and customers. SBC brings to the merger its financial strength and a full range of voice, data, networking, e-business, directory publishing, advertising and related services serving businesses, consumers and other telecommunications providers. SBC also holds a 60 percent ownership interest in the largest U.S. wireless company, Cingular Wireless, with more than 49.1 million customers and provides high-speed DSL Internet access to more American consumers than any other provider.
AT&T, while far from the pre-breakup company it once was, offers a worldwide presence in more than 60 countries, a global IP network, an impressive portfolio of data and IP services, hosting, security and professional services, technology development through its AT&T Labs, skilled networking capabilities and a significant base of government and business customers. In fact, AT&T serves all of the S&P 500 and virtually all of the Fortune 1000.
The landmark opportunity for a merger of the two companies will enable them to reach their full potential in terms of innovation and consumer choice — something, independent of one another, is unachievable in today’s draconian regulatory climate.
In addition, both companies have vowed to take seriously their responsibility to protect users’ privacy. Protecting consumer privacy — an immediate and growing concern as electronic data transmission becomes commonplace — should be a priority for all telecom companies. Combined, SBC and AT&T can set the standard for the rest of the industry by ensuring their customer’s private information is well-protected.
In our view, this merger is a win-win for consumers and the industry which will help ensure continued progress in technology and communications. We hope that the Federal Communications Commission will recognize the importance of allowing free-market principles to take root and thrive in the telecommunications industry by quickly approving SBC’s and AT&T’s request to merge.February 16, 2005