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A Clear Path to Consolidation

House Panel Appears Unlikely to Challenge Big Telecom Mergers

By Jonathan Krim
Washington Post Staff Writer
Thursday, March 3, 2005; Page E01

Six chief executives of the nation's premier telecommunications companies, once bitter competitors, came together yesterday to assure Congress that a series of mega-mergers that will shrink their number to three will benefit businesses and consumers.

And if yesterday's hearing before the House Energy and Commerce Committee is any guide, congressional leaders largely agree and are unlikely to mount serious challenges to the proposed joining of Verizon Communications Inc. with MCI Inc., SBC Communications Inc. with AT&T Corp. and Nextel Communications Inc. with Sprint Corp.

Edward E. Whitacre Jr., from left, of SBC Communications, David W. Dorman of AT&T, Ivan D. Seidenberg of Verizon Communications, and Michael D. Capellas of MCI attend yesterday's hearing before the House Energy and Commerce Committee. (Bill O'leary -- The Washington Post)

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The mergers, all announced within the past three months, are the latest temblors in a rapidly shifting communications landscape in which wireless and Internet-based services are supplanting traditional local and long-distance calling.

While Congress does not have authority to block or approve mergers, it oversees the Federal Communications Commission and is preparing to revise a broad telecommunications law it passed in 1996 that set rules designed to spur competition.

"The United States needs to have a vibrant communications industry with strong national players," said Rep. Joe Barton (R-Tex.), who heads the committee. "I believe that the companies before us today are creating such players and that U.S. economic growth and consumers will benefit as a result."

The committee's ranking minority member, Rep. John D. Dingell (D-Mich.), cautioned the Justice Department and FCC regulators who will review the mergers against "reverting to an antiquated mindset" of a world with separate telephone, Internet and video providers.

Such large mergers take about a year to be evaluated by federal regulators, and some states also are considering their own reviews. Verizon's deal to buy MCI is further muddled by a competing offer from Qwest Communications International Inc. MCI said yesterday it plans to consider Qwest's offer over the next two weeks.

During yesterday's hearing, the six executives sounded similar notes in their separate presentations, arguing that fewer, but stronger, companies would result in more competition. They dismissed concerns that the demise of the nation's two long-distance giants, and the combination of the third- and fourth-largest wireless carriers, would cause prices to rise.

"It should be evident to anyone with a cell phone or an e-mail account that the old distinction between local and long-distance is obsolete, as is the need for separate companies to provide them," said Verizon chief executive Ivan G. Seidenberg.

Michael D. Capellas, who heads MCI, agreed, saying that in an Internet-based world, digital packets that carry voice, data, video or any other content are virtually indistinguishable.

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