Phone Users May Get None of Merger Savings

[SOURCE: Los Angeles Times, AUTHOR: James S. Granelli]
California regulators Wednesday tentatively blessed two giant telephone industry mergers, but customers won't see much of the billions of dollars the companies expect to save. SBC Communications Inc.'s $16-billion acquisition of AT&T Corp. and Verizon Communications Inc.'s $8.5-billion purchase of MCI Inc. could reduce their expenses in the state by a combined total of up to $2.7 billion, consumer advocates say. But draft decisions by Public Utilities Commission members Susan P. Kennedy and Michael R. Peevey would exempt the companies from that requirement, prompting outrage from consumer advocates. "Consumers got hosed," said William R. Nusbaum, senior telecom lawyer for the Utility Reform Network. "Under both mergers, consumers are out at least a billion bucks, which is going into the pockets of shareholders." Commissioners Kennedy and Peevey, both of whom usually side with SBC and Verizon, argued that no rate reductions were necessary because the sharing provisions of the law don't apply in these cases. "Because the benefits of the merger will be passed through to California consumers through competition and market forces, there are no policy grounds for mandated sharing of those benefits," the two commissioners said in the SBC draft decision. Another SBC draft decision, by Administrative Law Judge Thomas R. Pulsifer, would force the new company to give $329.6 million to customers over six years. The commission is scheduled to make a final decision on the mergers at its Nov. 18 meeting, among the final hurdles before the deals can be concluded. State and federal regulators are reviewing the deals. The Federal Communications Commission is expected to discuss the mergers at its Oct. 28 meeting.
http://www.latimes.com/business/printedition/la-fi-sbc20oct20,1,3528875.story?coll=la-headlines-pe-business
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