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Telecom merger approvals get mixed reviews

By , IDG News Service
November 01, 2005 05:30 PM ET

IDG News Service - Organizations including a large-business telecommunications user group and two consumer groups complained that the FCC didn't go far enough Monday in imposing conditions on two giant telecommunications mergers .

The mergers will result in higher telecom and broadband prices paid by business and residential consumers, said groups representing telecom customers. But other groups, including conservative think tanks, said the FCC went too far in requiring a number of conditions in SBC's acquisition of rival AT&T and Verizon's acquisition of rival MCI.

With the FCC's approval, only a handful of state approvals remain before the mergers can be completed.

The FCC on Monday approved the mergers asking for several "voluntary commitments" from the two merged companies. On the FCC's insistence, Verizon and SBC promised not to increase the rates they charge competitors to use parts of their networks for two years. The two companies also agree to not increase the rates their customers pay for wholesale, high-speed DS-1 and DS-3 lines for 30 months, and they agreed to offer competitors for 30 months the same network access rates they give themselves and their affiliates.

The FCC's insistence that Verizon and SBC offer DSL broadband service as a stand-alone product separate from traditional telephone service doesn't make sense, because the so-called naked DSL requirement doesn't affect any competitive concerns raised by the mergers, said Randy May, senior fellow at the conservative Progress and Freedom Foundation.

"None of the parties on either side of the merger generally was offering naked DSL before they got together, so, without a condition, there would be no less naked DSL offered after merger approval," May wrote on his Web log Monday.

Under the FCC merger approvals, naked DSL must be available within a year of each merger's closing. Advocates of the stand-alone DSL provision say it would allow competition from independent VoIP providers, which need broadband connections to offer voice service.

The Competitive Enterprise Institute, a free-market advocacy group, also complained about the conditions attached to the mergers, saying the FCC took a narrow view of telecom competition.

"Rapid developments in technology, along with an environment where cable, telephone, and wireless companies all compete against each other, will help ensure competition in the industry," Braden Cox, the group's technology counsel," said in a statement. "The conditions are unnecessary burdens to the potential gains these mergers create. Synergies delayed are consumer benefits denied.”

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