Consumers protest plan to super-size SBC

Bigger Phone Company Will Mean Bigger Bills

For Immediate Release From The Utility Reform Network

San Francisco—Consumer advocates today joined other opponents of the proposed SBC/AT&T merger in urging the California Public Utilities Commission to reject the plan. TURN, California’s largest statewide utility consumer advocacy organization, said a super-sized SBC could mean super-sized phone bills for the consumers who can least afford it.

"Bigger is not always better," said TURN executive director Bob Finkelstein. "SBC already dominates the local phone market in California. This merger will merely help them tighten their stranglehold on captive consumers. If consumers are not satisfied with the rates or service SBC offers they will have nowhere else to turn."

The "Baby Bells" born out of the forced break-up of the AT&T monopoly in 1984 have spent the last decade devouring each other. Of the four that remain, the two that monopolize California, SBC and Verizon, have emerged as giants. As they’ve grown, they’ve resisted regulation, claiming dissatisfied consumers can "vote with their feet." But voting with your feet only works if there is somewhere to go, and SBC is swallowing up competitors like a hungry shark.

"The CPUC should be trying to preserve what little choice Californians have left," said Finkelstein. "Consumers have nothing to gain and everything to lose from a bigger and badder SBC."

In a protest that will be filed tomorrow, TURN urges the CPUC to reject the merger because:

  • The merger can only increase SBC’s domination of both wholesale and retail markets. SBC’s claims of possible competition from cable or VOIP ring hollow for small business customers who are unlikely to find them adequate replacements for local phone service.
  • Like SBC today, the super-sized company created by the merger will court high-revenue purchasers of broadband and product bundles. Consumers who want or need only basic service will get the short end of the stick.
  • The merger will limit the ability of regulators to monitor the service quality and financial operations of the new mega-monopoly.
  • SBC is trying to avoid California’s statutory requirement that it share the benefits of the merger equally with consumers by grossly underestimating California’s share of the benefits. While investors have been told the merger will produce $16 billion in benefits, SBC claims only $27 million of that is attributable to California, offering customers a measly $14 million. TURN estimates California benefits of $2 billion.