• Groups opposing consolidation in the telecom sector asked the Federal Communications Commission to reject the planned acquisition of AT&T Corp. by SBC Communications Inc. (“SBC”). “Having leveraged their local monopoly to drive many small competitors out of business, and their largest competitor to its knees, SBC now seeks clearance to swallow their biggest rival, leaving consumers at their mercy,” CompTel/ALTS, which represents carriers known as CLECs, wrote in its FCC filing. CompTel/ALTS was joined in a briefing with reporters by the Alliance for Competition in Telecommunications, the National Association of Utility Advocates, and the eCommerce & Telecommunications Users Group. Monday, April 25th was the deadline for comments on the proposed $16 billion deal, which was announced in January. SBC and AT&T have until May 10 to respond officially to public comments. The FCC is expected to rule on the merger in the fall.
  • MCI’s board on April 23 declared a $9.74 billion takeover bid from Qwest Communications International as superior to one from Verizon Communications, The Washington Post reports. Verizon has until Friday to increase its bid, which is currently about $2 billion less than Qwest’s. The FCC had set May 9 as the deadline for comment on a Verizon-MCI tie-up, but XO Communications, a competitive exchange carrier, has asked the agency to suspend the comment schedule until the bidding battle for MCI is resolved.
  • Other proposed telecom mergers under review by the Federal Communications Commission include Nextel Communications Inc. and Sprint Corp. In filings before the FCC, opponents of a proposed Sprint-Nextel merger warned, in a reply to oppositions last week, that the companies tried to divert the FCC’s attention from key issues. (Sprint and Nextel said most objections didn’t relate to their merger review and should be addressed elsewhere, if at all.) The opponents cited excessive market concentration, roaming agreements, spectrum aggregation and spin-off of the Sprint local wireline business as major concerns. U.S. Cellular said it’s “entirely appropriate for the FCC to establish important policies in ruling” on the merger, as it did in evaluating the Cingular-AT&T Wireless transaction, where it established criteria for evaluating wireless mergers.
  • The United States has dropped even further in the international high-speed Internet race. Statistics released this month by the International Telecommunication Union (“ITU”) show that U.S. global broadband penetration dropped last year from 13th place to 16th. The ITU figures show the United States at 11.4 broadband subscribers per 100 inhabitants as of December 31, 2004. That percentage of broadband is less than half of what South Korea boasts; the latter country is the global leader with 24.9 broadband subscribers per 100 inhabitants. Behind South Korea, filling out the top five nations are Hong Kong at 20.9 broadband subscribers per 100 inhabitants; the Netherlands, with 19.4 per 100; Denmark, 19.3; and Canada, 17.6. Telecommunications officials at the ITU and the OECD attributed the U.S. slide to the lack of vibrant competition in the broadband marketplace in this country and the absence of public policy that promotes broadband. “A lot of European countries [have grown] because they have fairly vibrant local loop unbundling,” said Ypsilanti, referring to the practice of requiring the dominant telecom provider to share high-speed wires. He added, “The U.S. is basically [digital subscriber lines] from incumbent [telecom companies] versus cable from incumbents, and that doesn’t seem to be generating that much competition.”

Authored by
Gregg Mendenhall