PublishedApril 23, 2002

CCIA Warns of Competitive Harm of AT&T-Comcast Merger

Consumers Union, Consumer Federation of America Highlight Consumer Harm at Joint News Conference

Washington, DC – The Computer & Communications Industry Association today appeared with two of the nation’s most respected consumer advocates, Consumers Union and the Consumer Federation of America, at a news briefing to discuss the competitive and consumer harm of the proposed AT&T-Comcast merger. This afternoon, the Senate Judiciary Committee Antitrust Subcommittee will commence hearings on the merger, at which no consumer advocates have been allowed to testify.

Edward J. Black, CCIA’s president and CEO, noted that the AT&T-Comcast merger would grant the combined company control of 56% of the industry and would exacerbate concerns that the cable industry is becoming increasingly anticompetitive. He also noted that cable companies’ anticompetitive behavior is no longer restricted to the traditional cable television industry, but is threatening competition in a number of burgeoning industries like broadband Internet, Internet-delivered on-demand entertainment, interactive television, consumer electronics equipment and set-top boxes.

“At a time when we are looking for more ways to advance competition in the cable and broadband industries,” said Mr. Black, “the merger of AT&T and Comcast would be a huge step backward for consumers, for competition and for the economy.”

Since 1996, cable rates have risen 40%, or about three times the rate of inflation. As a supplier of cable television services to consumers, AT&T-Comcast would have greater ability to control what consumers watch and what they pay to watch it. As a purchaser of programming, AT&T-Comcast would have enough customers to control what content providers distribute and to whom, and could withhold programming it owned from competitors.

“In the broadband industry, which is 70% controlled by cable companies,” commented Mr. Black, “a merger of AT&T and Comcast would further stifle competition necessary to reduce prices and increase the availability of high-speed Internet access. Microsoft’s investment in the transaction also raises concerns about the anticompetitive impact of guarantees that Microsoft MSN and Microsoft set-top box technology were given as part of the deal.”

Mr. Black also questioned AT&T’s and Comcast’s promises that the merger will benefit consumers and enable the companies to roll out new services.

“In promoting proposed mergers with cable companies TCI and MediaOne,” he said, “AT&T maintained that the mergers were necessary if the company was to compete with local telephone service. Yet AT&T has never met even its own deployment schedule for cable telephone.”

Mr. Black also noted that AT&T promised that the efficiencies created by the mergers would allow it to reduce cable rates. “But even after cutting overhead costs by $250 million annually,” he concluded, “AT&T still continues to impose rate hikes on its customers.”

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