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SBC and Ameritech Merger Sparks Debate over Competition

Strategic Insights

— 1 min read

The proposed $62 billion merger of telecom service providers SBC and Ameritech has ignited a heated debate over the impact on competition in the telecommunications industry. Supporters argue that the merger will promote competition and add 8,000 new jobs, while opponents claim it will eliminate competition and create a monopoly.

Key Takeaways:

  • The Communications Workers of America (CWA) has come out in support of the merger, stating it will promote competition and add 8,000 new jobs.
  • The CWA represents 78,000 SBC workers and 30,000 at Ameritech, and has praised SBC's recognition of the importance of a stable, high-quality workforce.
  • MCI-WorldCom, AT&T, and Sprint have filed briefs with the Federal Communications Commission (FCC) in opposition to the merger, arguing that it will void out competition and create a monopoly.
  • AT&T's Wayne Jackson stated that the company's attitude is "enough is enough" and that no one expected the Bells to continue merging and expanding across the country.
  • Access charges paid by long distance companies to tap into the network will now go into the coffers of a single telephone company, compromising AT&T's regulatory battles to reduce those charges.
  • A merged SBC-Ameritech would have an "uncrackable" monopoly on in-region long-distance service and would provide much stronger competition to AT&T and others for out-of-region long distance service.
  • The merger would also give the new company control over Texas, one of the biggest originators of international calling.

Statistics:

  • The proposed merger is valued at $62 billion.
  • The CWA represents 78,000 SBC workers and 30,000 at Ameritech.
  • 8,000 new jobs are expected to be created as a result of the merger.
  • 3,600 new jobs were added after SBC's merger with Pacific Telesis.
  • The FCC will hold two en banc sessions to discuss the competitive effects of several proposed telecom mergers.

Sources:

  • Washington D.C., U.S.A., 1998, Phil Piemonte, Newsbytes.
  • State Telephone Regulation Report, Herb Kirchhoff.
  • Federal Communications Commission (FCC) Audio Broadcast home page at http://www.fcc.gov/realaudio.
  • Reported by Newsbytes News Network at http://www.newsbytes.com.

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