New York regulators have tentatively concluded the pending merger of MCI Inc. and Verizon Communications Inc. would increase the market power of the two carriers, resulting in less competition and potential harm for consumers.
In a white paper released this week, the New York State Public Service Commission recommended remedies to prevent harmful effects of the merger combining Verizon, the largest local phone company, with MCI, the second-largest long-distance carrier.
For example, the regulatory agency said Verizon could be required to offer DSL as a standalone product, a stipulation that would allow consumers to purchase Internet phone service from other companies.
The New York PSC tentatively concluded that the merger would increase the market power of MCI and Verizon in the residential and small business markets, although the commission expressed greater concern over the implications for larger businesses.
With respect to the large business [enterprise] and medium-size business markets, we tentatively conclude that the Verizon/MCI merger will produce significant consolidation and is therefore more troubling, the commission stated in the report.
Telecommunications carriers in the United States and abroad have claimed in regulatory filings with the FCC that the MCI/Verizon merger and pending combination of AT&T Corp. and SBC Communications Inc. will significantly reduce their choices to lease network access to commercial buildings to support business customers.
The New York PCS recommended solutions to prevent such an outcome. One suggested solution: entitling smaller carriers to the same rates, terms and conditions for wholesale services that they currently receive from MCI for 36 months.
There are . remedies available to the commission that would adequately address the harmful effects of a highly concentrated wholesale market, the New York PCS stated.
New York regulators also studied the AT&T-SBC merger and found that remedies were not required in the state.
In general the SBC/AT&T merger does not raise the same level of concern as the Verizon/MCI merger in New York State, the commission noted. SBC has a relatively small share of the New York market.