Statement of Congressman John D. Dingell, Ranking Member
Committee on Energy and Commerce

FULL COMMITTEE HEARING ON
“COMPETITION IN THE COMMUNICATIONS MARKETPLACE: HOW TECHNOLOGY IS
CHANGING THE STRUCTURE OF THE INDUSTRY”

March 2, 2005

Thank you, Mr. Chairman. I commend you for holding this timely hearing on three proposed mergers: SBC-AT&T, Verizon-MCI, and Sprint-Nextel. The scale of the transactions will further transform the rapidly evolving communications industry, so this Committee is right to examine them closely.

SBC’s proposed acquisition of AT&T could mark the end of the line for a 130-year-old icon, once the most powerful company in America. In its 1984 breakup, AT&T saddled the local Bell companies with significant burdens. The industry was then subjected to a difficult period in which one person controlled its destiny. In 1996, Congress freed the industry from this stifling structure. Yet, since then, AT&T managed itself into a meltdown. It failed to embrace far-reaching changes that were taking hold in the industry, including the rise of the Internet and the structural collapse of long distance as a distinct service offering. Some may view SBC’s acquisition as offering AT&T a way out of its self-inflicted morass.

MCI, on the other hand, began corporate life as a scrappy competitor willing to take risks on new technologies. It evolved into the second largest long distance company and the world’s largest Internet backbone provider. Unfortunately, WorldCom’s takeover mired the company in risky and inappropriate ventures. The backing of a solidly-managed company could offer MCI a renewed opportunity to reshape its future.

The Sprint-Nextel transaction will combine the third- and fifth-largest mobile providers into a larger third-ranked nationwide competitor, offering Nextel’s loyal business customers the benefit of a national IP backbone.

These transactions highlight how technology is spurring a revolution in the way Americans communicate. We are a long way from the reconstitution of Ma Bell. The modern communications marketplace bears little resemblance to the prior dominance of a single phone company. It is incumbent on regulators to leave the deal of last century to the bygone era, and put 21st Century deals in their proper context.

Today, many rivals challenge traditional phone companies. There are now more cell phones than landline phones. Cable operators provide voice services and have more broadband customers than phone companies. Internet companies are now connecting voice calls. All sectors are moving toward a converged world of voice, video, and data offered across platforms. It is this changed communications landscape that is compelling this Committee to rethink our telecommunications laws.

The Government has a responsibility to analyze mergers carefully to make sure they are not harmful to the public. I believe four overriding questions must be answered:

First, how will these transactions affect consumers? Will consumers - both mass market and enterprise - benefit from more choices, better quality, lower prices, and innovative product and service offerings?

Second, how will these mergers affect jobs? Will these transactions support the creation of good jobs for working Americans as these companies handle increasingly complex communications needs?

Third, how will these transactions affect competition in communications markets? The consequences for independent companies, rural companies, and small and mid-size businesses must be examined closely.

Fourth, how will these transactions affect communications policy? What are the implications of bundling voice, data, wireless, and video? I would note that these transactions could renew efforts to achieve intercarrier compensation reform and the preservation of federal universal service programs.

I do not make any judgments today on these transactions. But I caution the authorities reviewing these mergers against reverting to an antiquated mindset of compartmentalized, distance-sensitive services and providers. Consumers will benefit from a realistic assessment of what telecommunications means in the 21st Century.

It is important for this Committee to give affected parties a chance to be heard on where the public interest lies in any given matter. I thank the CEOs for coming to explain their mergers. I look forward to the witnesses on the second panel who will offer their own insight. This Committee can always benefit from a fully informed debate among diverse stakeholders on issues of great importance to the American public.

(Contact: Jodi Seth (202) 225-3641)