WASHINGTON-Telecom mergers are not just about mergers anymore.
Multibillion-dollar deals
have become the jumping-off-point for activism on labor rights, civil rights, regulatory reform, consumer protection,
globalism, politics and a slew of other special-interest issues.
So many and so big have mergers become that Senate
Judiciary Committee Chairman Orin Hatch (R-Utah) now ponders whether the 1976 Hart-Scott-Rodino notification
threshold requirement for merger antitrust review needs revision.
With so much money at stake involving so many
people in such huge companies, deals of such force can send powerful jolts through Wall Street and global markets and
set in motion events that create ripple effects that go far beyond the transactions themselves. Telecom mergers have
become the crossroads of America.
And everyone is getting in on the act.
Rev. Jesse Jackson and the
Rainbow/Push Coalition have used mergers as a springboard to decry the lack of diversity in the telecom industry and
to leverage concessions from parties at the table.
Indeed, Jackson last week passed on running for president in 2000
in part to help African Americans get a piece of the expanding telecom pie.
Organized labor, a powerful force in
American politics, has become as forceful a voice on telecom mergers.
When the Wall Street Journal last week
hinted the Federal Communications Commission might delay or attach tough conditions to approval of proposed
mergers between SBC Communications Inc. and Ameritech Corp. and between Bell Atlantic Corp. and GTE Corp., the
unions roared.
“Instead of blocking these transactions, regulators should be expediting these mergers, which
will create quality, high-tech jobs for workers and will bring expanded benefits of information technology to
consumers,” said Morton Bahr, president of the Communications Workers of America.
But the real point
CWA wanted to make was this: FCC, don’t raise the bar for proposed mergers of Baby Bells (which are unionized
and which must compete globally) against giants like AT&T Corp. and MCI WorldCom Inc. (which CWA says laid off
3,500 workers and is not unionized).
Consumer activists feel differently, believing Justice’s wireless license
divestiture condition on the SBC-Ameritech merger was tantamount to rubber-stamping the deal.
“Both
Congress and the Clinton administration have made a mockery of pro-competitive telecommunications policy,”
said Gene Kimmelman of Consumers Union and Mark Cooper of Consumer Federation of America in a joint
statement.
They added, “The Department of Justice’s failure to block the merger of local telephone
monopolies SBC Communications Inc. and Ameritech deals a death blow to the goal of promoting broad-based local
telephone competition.”
For the wireless industry, telecom merger mania has helped to rekindle the debate on
competition, generally, and spectrum caps specifically.
Last week, for example, the Justice Department conditioned
its approval of the $57 billion merger between SBC and Ameritech on the divestiture of cellular systems in 17 markets
where ownership overlaps.
“Competition between wireless mobile telephone providers is increasingly
important to consumers who use wireless services for a wide variety of personal and business purposes,” said Joel
Klein, the Justice Department’s antitrust czar.
“Without these divestitures,” added Klein,
“consumers would have paid higher prices or received lower quality services for wireless mobile telephone
service in the 17 wireless mobile telephone markets where Ameritech and either SBC or Comcast are the two cellular
telephone providers. The proposed consent decree will protect consumers from any loss in competition for wireless
mobile telephone service.”
In addition to seeking to buy Ameritech, SBC wants to acquire the wireless assets
of Comcast Corp. as well.
The SBC-Ameritech merger still has to pass muster with the Federal Communications
Commission, whose antitrust analysis is different than Justice’s. For the most part, the 45-megahertz commercial
mobile radio service spectrum cap is the FCC’s guiding light in considering mergers involving wireless
licenses.
While the question of lifting the spectrum cap has divided the two major wireless trade groups-Cellular
Telecommunications Industry Association (for) and Personal Communications Industry Association (against), the issue
of FCC merger reviews has split the commission.
FCC Chairman William Kennard and fellow Democratic
Commissioners Susan Ness and Gloria Tristani believe the agency has a statutory obligation to do so. Republican
Commissioners Harold Furchtgott and Michael Powell say FCC reviews duplicate the Justice’s work.
Indeed, FCC
merger oversight of proposed SBC-Ameritech and Bell Atlantic Corp.-GTE has become a wedge in the FCC reform
debate that House telecom subcommittee Chairman Billy Tauzin (R-La.) is leading.
At the same time, telecom
mergers pending before the FCC have induced scores of letters from lawmakers, who offer kindly suggestions to
federal regulators. Sens. Mike DeWine (R-Ohio) and Herb Kohl (D-Wis.) have introduced legislation to quicken the
pace of FCC merger review.
