WASHINGTON-The Consumer Federation of America is quietly circulating a
white paper arguing against the $41 billion merger of AT&T Wireless Services
Inc. and Cingular Wireless L.L.C. saying that because Cingular is owned by two
Baby Bells, it will dilute intermodal competition.
“The Federal
Communications Commission and the Bush Administration are immediately faced with
another huge decision that could undermine the potential for cross-technology
competition. The FCC and the Department of Justice are currently reviewing the
Cingular/AT&T Wireless merger. Since SBC Communications Inc. and BellSouth Corp.
are the owners of Cingular, which is seeking to become the largest wireless
carrier in the nation by buying up AWS, this merger represents another
anticompetitive blow to consumers. It removes the largest unaffiliated
competitor from the wireless market and transfers it to local-phone companies
that dominate about half of the country. In light of recent developments in
local telephone markets, this merger requires very careful scrutiny,” wrote
Mark Cooper. “This paper shows that if antitrust authorities take a close
look, they will conclude that the merger is anticompetitive from every
angle.”
Although Cingular declined to comment, in their reply comments
filed in May, they responded to similar criticisms by arguing that Cingular was
not the most dominant carrier in the service area of its Baby Bell parents.
“If affiliates of Cingular’s parents really were able to foreclose
competing wireless firms, one would expect Cingular to have a dominant and
growing share in those incumbent local exchange carrier regions. But the data
show quite the opposite-Cingular has lost share,” said Cingular.
While
many suspect that CFA has been showing the white paper to federal regulators at
both the FCC and the Justice Department, there is no official record of
it.
CFA did not respond to a request for comment.
As analysts and
policy-makers often characterize wireless as a nationwide service, CFA argues
that wireless is local.
“Wireless is sold as a local product. On the
demand-side, consumers buy and use wireless as a local product. When a customer
visits a local store in Dallas for wireless, they expect a local discount. They
want a local number to call and give out,” reads the paper,
“Remonopolizing Local Telephone Markets: Is Wireless Next?”
FCC
Chairman Michael Powell has long argued that instead of worrying about local
landline competition, regulators should be concerned about whether there is
adequate intermodal competition. Cooper attempts to refute this argument by
saying that because SBC and BellSouth can bundle Cingular’s service with their
landline product, it does not represent competition. Cingular also blunted this
criticism in May by saying that bundling only accounts for a trivial amount of
demand.
