WASHINGTON — Calling the proposed $69 billion purchase of cable giant MediaOne by AT&T a “bid to monopolize America’s cable TV and broadband Internet markets,” a troika of public interest groups Tuesday asked the government to stop the deal.
Consumers Union, Consumer Federation of America and Media Access Project submitted filings to the Federal Communications Commission and the Justice Dept., accompanied by an economic analysis that the groups say demonstrates “that the merger violates both the antitrust laws and the market concentration limits mandated by Congress and administered by the FCC.”
Mark Cooper, CFA’s research director, said at a press conference that “by combining cable monopolies that serve as much as 60% of the country, dominating popular cable channels and controlling critical Internet services, AT&T is attempting to thwart the development of competition through its acquisition of MediaOne .”
The groups’ study says that the cable merger, coupled with related deals with Microsoft and Cox, would give AT&T the ability to control a majority of U.S. cable systems, dozens of the most popular cable TV channels, as well the two dominant high-speed Internet services, and create preferential deals with set-top box manufacturers.
It goes on to dispute one of AT&T’s assertions that the merger is needed to enlarge its cable holdings to subsidize offering local telephone service that would offer competition to current providers (and lower prices to consumers). “Policy-makers should reject this diversion” that the only way to achieve local telco competition is to “allow the creation of a near-national monopoly over cable TV wires (which also creates a clear monopoly over broadband Internet services).”
Subscriber limits urged
In addition to petitioning the FCC to dismiss the merger, the three groups also filed a motion with the Commission asking it to set aside its voluntary stay of enforcing its “horizontal ownership” provisions that limit how many subscribers a single cable operator may serve. Following a 1993 court case, the FCC voluntarily instituted the stay pending the government’s appeal to “avoid potential confusion and uncertainty.” Now, “there is no judicial impediment to reinstitution of these rules,” the groups’ motion said.
The groups also attacked the structure of the proposed deal, saying that spinoffs and creation of separate “tracking stocks” for some companies are “diversions.” The AT&T deals, the filing goes on to say, “are not a case of a close call that can be mitigated by small changes; this is a massive increase in concentration.” And it points out that the Federal Trade Commission rejected a proposed merger between TCI (now owned by AT&T) and Time Warner two years ago.
In a letter to Joel Klein, the Justice Dept.’s assistant attorney general for the Antitrust Division, the groups asked him to block the merger, saying the deal illustrates “how AT&T is attempting to build a digital conglomerate with control over a broadband cartel that could dramatically impede the development of competition in a broad array of communications markets.”
AT&T Washington spokesman Jim McGann said he was surprised to see such criticism from consumer groups: “This deal is all about offering consumers a choice in local telephone service. That was the point of the TCI merger and it’s the point here.”