Carriers Unite to Oppose Telecom Mergers

Broadwing Communications LLC, Covad Communications Group Inc. and XO Communications Inc. are among a working group of six telecommunications carriers that oppose the megamergers that would help the two biggest regional phone companies get even bigger.

The planned mergers would deal a huge blow to competition in the consumer and business markets by making AT&T Corp. and MCI Inc. part of SBC Communications Inc. and Verizon Communications Inc., according to the coalition, which also includes Cbeyond Communications, Eschelon Telecom Inc. and SAVVIS Communications Corp.

These combinations produce less, not more competition, XO Chief Executive Carl Grivner said 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 coalition is opposing SBCs pending $16 billion acquisition of AT&T Corp. and Verizons plans to buy MCI Inc. for $6.75 billion. Qwest Communications International Inc., the fourth-largest local phone company, also has bid for MCI.

In filings with U.S. regulators, San Antonio, Texas-based SBC says the AT&T acquisition will not reduce competition in the consumer market because AT&T began retreating from that space last summer. Nor will the acquisition curtail competition in the business market because it is highly competitive, according to SBC, the second-largest local phone company.

AT&T and MCI both support a large base of enterprise and government customers over national and global networks that are significantly broader than the reach of SBC and Verizon.

AT&T and MCI, the largest national competitive carriers, provided vigorous competition to SBC and Verizon at every level of the telecommunications landscape and provided the strongest check on the continued local monopoly power of these companies, Cbeyond CEO Jim Geiger said. In many cases, AT&T and MCI provided wholesale services to new 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.

The team assembled by the group of competitive telecom providers includes 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 with Kelley Drye & Warren, LLP.

The group plans to submit information to the Department of Justice and the FCC on the implications of the mergers as the agencies review the proposed deals.

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