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Pennsylvania Approves Merger of GTE and Bell Atlantic Amidst Anti-Competitive Concerns

Strategic Insights

— 2 min read

The Pennsylvania Public Utilities Commission (PUC) has approved the merger of GTE and Bell Atlantic, despite concerns from competitor AT&T-Pennsylvania that the deal is anti-competitive. The merger still requires approval from six other states and the Federal Communications Commission (FCC) before it can be implemented. The PUC's decision was made after the companies agreed to specific financial and service commitments, including a rate cap through 2003, elimination of charges for Touch-Tone service, and the provision of new services such as Caller ID and Automatic Call Return.

Key Takeaways:

  • The PUC approved the merger with a 4-0 vote, despite a previous negative recommendation from an administrative law judge who found the merger to be "anti-competitive".
  • The approval was conditional on the companies' agreement to specific financial and service commitments, including a rate cap through 2003.
  • Bell Atlantic will invest approximately $2.3 billion and GTE about $210 million in Pennsylvania between 2000 and 2002 to improve telecommunications infrastructure.
  • The merging companies will substantially decrease the prices competing companies pay to complete calls over their networks and lease parts of their networks for competing local service.
  • The companies will provide new services such as Caller ID, Automatic Call Return, and Automatic Busy Redial to all GTE North customers in Pennsylvania within 30 months of the merger.
  • Bell Atlantic and GTE expect to receive approvals from the FCC and the remaining six affected states sometime early next year.

Statistics:

  • The merger still requires approval from six other states and the Federal Communications Commission (FCC) before it can be implemented.
  • The PUC's decision was made after the companies agreed to specific financial and service commitments, including a rate cap through 2003.
  • The rate cap through 2003 means Bell Atlantic prices for basic telephone service will not have increased for almost 20 years.
  • The elimination of charges for Touch-Tone service will save GTE customers nearly $10 million dollars a year.
  • The realignment of GTE's rates in rural Pennsylvania with Bell Atlantic's rates in comparable areas is expected to result in a $5 million saving for GTE customers.
  • Bell Atlantic serves 6.5 million telephone access lines in roughly 40 percent of the state, and GTE serves over 650,000 access lines.
  • The companies employ more than 21,000 people in Pennsylvania.

Sources:

  • Harrisburg, Pennsylvania, U.S.A., November 5, 1999 (Newsbytes). "Bell Atlantic, GTE Agree to Merger Commitments."
  • Bell Atlantic's Web site, http://www.ba.com
  • GTE's homepage, http://www.gte.com
  • Newsbytes.com, http://www.newsbytes.com (19991105/Contact: Harry Mitchell, 304-344-7562 /WIRES TELECOM, LEGAL, BUSINESS/).

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