A consumer coalition criticized AT&T Corp.'s proposed $58 billion acquisition of MediaOne Group Inc. yesterday, contending that the merger would give the number one long-distance company too much control over the cable and high-speed Internet markets.
The consumer group asked the Federal Communications Commission and the Justice Department to block the merger on grounds that it would inflate cable and broad-band Internet rates and add new barriers to competition in the cable market.
"The merger is a blatant violation of antitrust laws," said Gene Kimmelman, co-director of Consumers Union's Washington office. The Consumers Federation of America and Media Access Project also are coalition members.
In the FCC petition, the group urged the commission to lift a stay on a rule that limits one company's share of the cable market to 30 percent. The coalition estimated the MediaOne acquisition would give AT&T 57 percent of the cable market, but AT&T said the figure would be much lower.
Federal regulators said they are still reviewing the AT&T proposal.
Jim Cicconi, AT&T's executive vice president and general counsel, called the criticisms from consumer advocates "a contorted reading of the [antitrust] law."
"In any merger, you have a lot of filings that are full of hyperboles," he added. "The agencies are good at separating fact from fiction, and the facts are compelling" for AT&T.
Some of AT&T's long-distance competitors aren't voicing strong opposition, but they are concerned about the issue of open cable network access.
Sprint Corp., the number three long-distance company, won't oppose the merger, but in its official filing Monday it will ask the FCC to examine the issues of universal access to AT&T cable lines, spokesman James Fisher said.
AT&T has said in the past that it faces competition from other forms of delivery, such as satellite systems. Cicconi said AT&T will use its new capacity to provide competitive local phone service and high-speed Internet service over cable lines.
Consumer groups said AT&T had not proved it can fulfill its promises to provide local phone competition. Besides, said Mark Cooper of the Consumer Federation of America, "we cannot accept an increase in market share in one market to exchange for the potential of competition in another."