The cable industry is raising concerns about SBC Communications Inc.’s plan to acquire AT&T Corp. for $16 billion.
"The proposed combination of the largest and second-largest telephone providers in SBC's 13-state region raises obvious antitrust concerns that regulatory authorities will have to scrutinize carefully,” National Cable & Telecommunications Association president Robert Sachs said in a prepared statement Monday.
In recent years, the NCTA has not been directly involved in mergers, letting individual cable companies seek merger conditions at the Department of Justice and the Federal Communications Commission on their own.
Bright House Networks, Insight Communications Co. Inc., Cable One Inc., Cox Communications Inc. and Cablevision Systems Corp. all sought behavioral restrictions on News Corp.’s takeover of DirecTV Inc. while the NCTA remained on the sidelines.
The trade group’s decision to speak out about the phone merger comes as Comcast Corp., Time Warner Cable and Cablevision follow Cox’s lead in broadly providing local phone service over their own facilities in direct competition with SBC and other Baby Bells.
“Cable companies, other phone competitors, consumers and business users alike have a vital interest in ensuring that this new telco behemoth does not act anticompetitively to thwart emerging phone competition. We will work closely with federal and state regulatory authorities as they examine the proposed SBC-AT&T transaction,” Sachs added.
A Legg Mason Wood Walker Inc. report Monday said SBC and AT&T could need 12-18 months to gain merger approval, which would likely include “significant divestitures, particularly in SBC’s region.”
The analyst added that the deal has “a good chance of eventually gaining antitrust/regulatory clearance.”
Consumer groups attacked the SBC-AT&T deal as another example where the Telecommunications Act of 1996 did a better job of promoting mergers instead of competition.
"While this is not the largest merger of recent years, it is very troubling because it demonstrates the complete failure of policy to promote competition in the marketplace and would mark one of the final acts in the long-running reconsolidation of the industry,” Consumers Union senior director of public policy and advocacy Gene Kimmelman said in a prepared statement.
“It is time for Congress to reconsider the deregulation experiment of the 1996 act and give consumers the protection that market forces are failing to provide,” he added.