AT&T/SBC Merger -- Rates Going up for Customers (Just Like Consumer Groups Said They Would)

In 2005, when hearings about the AT&T/SBC merger were taking place. Many consumer groups stated that the merger would all but guarantee higher prices for end users. Time and again, we stated that telecommunications history is rife with examples of mergers lead directly to higher prices for basic services as competition lessens. Thus, it was amazing to me that politicians bought the inane arguments of paid telecom lobbyists that this wasn't the case and allowed the AT&T/SBC merger to go through. The merger happened less than a year ago (seven month, in fact) and now AT&T has announced that it's raising basic phone rates for their customers -- fulfilling exactly what opponents of the merger warned against and showing just how misleading pro-merger representatives were. More info below:

AT&T GETS MORE FOR LESS
[SOURCE: San Francisco Chronicle, AUTHOR: David Lazarus]

In March 2005, then-SBC's chief exec, Ed Whitacre, testified in Congress that his company's then-pending $16 billion acquisition of AT&T would have no adverse effect on consumers. He was asked by Rep. Ed Markey (D-MA) if he would pledge not to raise residential phone rates once the merger goes through. According to reports of the hearing, Whitacre assured the congressman that the deal would "have no impact on the consumer marketplace." Rep Markey persisted. If that's the case, he said, would Whitacre publicly pledge that rates won't go up? "I can't pledge that forever, but don't see anything that would impact that in the foreseeable future," Whitacre replied. "How long is the foreseeable future?" Rep Markey asked. "can't make a pledge for any specific length of time," Whitacre answered. "I can't give you a specific number of days or years. I really don't foresee it." Less than seven months after the SBC-AT&T merger was finalized in November, rates are now going up in the form of higher minimum usage fees. If you're an AT&T long-distance customer and you don't make a lot of calls, there's a good chance your monthly bill will be going up as a result of these new "minimum usage" fees. AT&T says on its Web site that long-distance customers "enjoy great rates usually with a small or no monthly plan fee." It says it needs to charge (or in some cases increase) monthly minimum usage fees "in order to keep these rates low and still recover our costs of providing basic service." Industry analysts and consumer advocates say this just doesn't ring true. "Carrier costs are not going up to provide long-distance service," said Lisa Pierce, a vice president at Forrester Research who specializes in telecom issues. "If anything, the cost has been coming down."

See also: AT&T/Bell South to Public: We Don't Have to Pay Attention to the Public Interest, Just the Corporate Bottom Line