The United States Department of Justice (DOJ) cleared the pending mergers of SBC/AT&T and Verizon/MCI with a short list of conditions. These include divesting connections to about 350 commercials buildings where each of the telecom giants would have monopolistic control. The Department of Justice said it coordinated with the FCC to investigate objections to the mergers.
The DOJ noted that Verizon, Verizon and MCI are the only two firms that own or control a direct wireline connection to hundreds of buildings in the metropolitan areas of Washington-Baltimore; Boston; New York; Philadelphia; Tampa; Richmond, Virginia; Providence, Rhode Island; and Portland, Maine. Therefore, in the absence of new entry, the merger would eliminate competition for facilities-based local private line service to those buildings.
Similarly, according to the complaint against SBC, SBC and AT&T are the only two firms that own or control a direct wireline connection to certain buildings in the metropolitan areas of Chicago; Dallas-Fort Worth; Detroit; Hartford-New Haven, Connecticut; Indianapolis; Kansas City; Los Angeles; Milwaukee; San Diego; San Francisco-San Jose; and St. Louis. Therefore, in the absence of new entry, the merger would eliminate competition for facilities-based local private line service to those buildings.
Under the terms of the settlements, Verizon and SBC must each divest connections to more than 350 buildings in their respective territories, to a single buyer in each city, generally using long-term leases commonly used in the telecommunications industry, known as indefeasible rights of use or “IRUs.”
As part of its investigation, the DOJ’s Antitrust Division considered numerous product and geographic markets and evaluated all overlaps between the merging parties. The Division took into account competition from cable companies as well as emerging technologies such as VOIP.
The Division also considered changing regulatory requirements such as the FCC’s Triennial Review Remand Order (TRRO) and efficiencies that the parties claimed would result from the mergers.
Both mergers are still awaiting clearance from the FCC, as well as from a number of states.
http://www.usdoj.gov
