Qwest Communications International Inc. yesterday raised questions about the pending merger of two major rivals, accusing SBC Communications Inc. of anti-competitive practices as the government considers SBC's purchase of AT&T Corp.
Denver-based Qwest said SBC was making it harder for competitors to serve lucrative medium to large companies and was limiting the ability of rivals to lease SBC lines at cheaper government-regulated rates. It also said SBC appeared to be pressuring smaller phone companies not to merge with unspecified "blacklisted" rivals.
San Antonio-based SBC dismissed Qwest's claims and said it expected the Federal Communications Commission and Justice Department to approve its $16 billion acquisition of AT&T.
Qwest is trying to influence the FCC as the agency weighs both the SBC-AT&T merger and Verizon Communications Inc.'s planned $8.46 billion purchase of MCI Inc.
Qwest was rebuffed in its own effort to buy Ashburn-based MCI this year, and the two mergers leave Qwest -- the fourth-largest U.S. telephone company -- at a competitive disadvantage to the remaining regional telephone giants.
"SBC already is using its increased market power arising from its acquisition of AT&T to create new barriers to the development of competition," Qwest said in a letter it said it would send today to the FCC. The company provided a copy of the letter to The Washington Post.
"These actions underscore why the merger should be conditioned on full divestiture of overlapping AT&T operations and related restrictions on terms and conditions under which SBC provides special access," the letter added.
Special-access customers are usually medium to large companies that, because they buy large amounts of voice and data service, are provided dedicated lines to connect directly to long-distance networks. Long-distance companies typically pay the local telephone company special-access fees for these dedicated lines.
"We are confident that the FCC and the DOJ, after an exhaustive and careful review of the facts, will determine that the merger of SBC and AT&T will benefit consumers -- and many customers have gone on record in support of the merger for this reason," said an SBC spokesman.
"This filing is a sad, desperate act by one of our competitors who is afraid of having a vigorous competitor in their own back yard," he added.
In its letter, Qwest said SBC was capping the number of circuits it would transfer to competitors in a given year, limiting Qwest's ability to serve special-access customers.
It did not disclose the cap but said it was below what SBC transferred for Qwest in the first half of 2005.