The Honorable Ernest Hollings
Chairman
U.S. Senate Committee on Commerce, Science, and Transportation
253 Russell Senate Office Building
Washington, DC 20510
RE: Request For Immediate Hearings On SBC-Ameritech's Failed Competition Commitments And the Divestiture of Ameritech from SBC.
Dear Mr. Chairman:
On behalf of TeleTruth, a nationwide alliance of broadband and telecom customers, I am writing to urge you to hold hearings on the failure of SBC to live up to its commitments stipulated in exchange for federal government approval of its merger with Ameritech. According to the merger agreement, by April 2002 SBC was supposed to be competing in local telephone service in 30 cities outside its region or pay fines totaling $1.2 billion. There is currently no indication that SBC has fulfilled this commitment.
As you are aware, there has been a disturbing pattern of behavior on the part of the local Bell monopolies to make and then ignore commitments to the public to win a relaxation of regulation and favorable decisions opening the way for consolidation and merger within their segment of the industry. Because the Bell companies have not been held accountable by regulators for their commitments these companies have been able to strengthen their monopoly control over key areas in wireline telecommunications at the expense of the public’s interest in fostering a meaningful competitive marketplace.
We believe that the imposition of the $1.2 billion penalty on SBC in response to its failure to meet its obligations and commitments under its Ameritech merger agreement is the minimum fine required in the public interest. But we also believe it is not a penalty of sufficient size to modify Bell behavior. It is clear to us that SBC’s commitments and subsequent actions were deceptive and were designed to gain additional monopoly power and control over core markets. SBC’s behavior has been and is in stark contrast to both the intent and letter of telecommunication reform. Its success in perpetuating and extending its monopoly power has harmed customers.
Time and again, we believe SBC has demonstrated that it has both the incentives and power to advance its monopoly interests, capture the regulatory process, ignore the public interest and either derail or successfully bury any regulatory effort to force it to live up to its commitments. As a consequence, we respectfully request Congressional hearings on this subject before your committee and suggest strongly that divestiture as a remedy be considered as stipulated in the agreement and in order to dismantle the structural root cause incentives and capabilities that permit and reinforce such SBC behavior.
As strong supporters of the customer’s and the public’s interest in telecom and broadband issues, members of TeleTruth support your bill S. 1364 and stand ready to support your efforts to get to the bottom of this continuing problem. My colleagues and I will be pleased to answer any questions you might have.
Sincerely,
Bruce Kushnick, Chairman
826 Broadway
Suite 900
New York, New York, 10003
212-777-5418