Jim Butman & Drew Petersen: Rebuilding Humpty Dumpty

As summer arrives and firework displays and family vacations capture the attention of Wisconsinites, a uniquely large and historically significant business merger is beginning to receive important regulatory scrutiny in our nation’s capitol.

This merger will combine SBC Communications, Wisconsin’s largest local phone and data provider with AT&T, the undisputed telecommunications service leader to Fortune 1000 corporations, and the largest long distance and competitive provider challenging the former Bell operating companies for customers nationwide.

The proposed purchase of AT&T by SBC has the potential to demonstrably alter the way a majority of our state’s commercial and residential telecommunications customers conduct their daily affairs.

For most urban U.S. consumers today, especially residential and small business patrons, the communications market is rapidly deteriorating into a duopoly dominated by the Bells and cable operators.

Wisconsin, however, due to a fledging economy and classic entrepreneurial spirit, is fortunate to have some very credible competitive alternative providers currently operating in the state’s more urban markets like Madison, Milwaukee, Green Bay, Waukesha, Janesville, Kenosha and Racine.

Competition in the telecommunications industry has done wonders for consumers and businesses across Wisconsin, resulting in small business savings of roughly 30% annually.

Competitors have led the way in accelerating the deployment of world-class technology such as high-speed Internet and the provisioning of outstanding services at value-based pricing.

Competition benefits anyone that has selected an alternative provider and even those who have not.

Since 1996, telecommunications competition has generated more than $150 billion of investment and created 77,000 new jobs nationally– thousands here in Wisconsin.

Our company, Madison-based TDS Metrocom, has invested almost $500 million in the state over the past 6 years and added nearly 1000 high paying jobs to the Wisconsin workforce and tax base.

If you agree local phone competition from new entrants such as TDS Metrocom has produced lower prices for all consumers by challenging companies such as SBC to lower their own retail prices and improve their sluggish customer service, you would do well to be skeptical of the claims of SBC and AT&T that “bigger is going to be better?”

History reminds us in previous merger deals, like SBC’s acquisition of Ameritech, the lists of commitments and future benefits were long and attractive to regulators, yet the results were fraught with broken promises and the benefits are still yet to come.

In fact, SBC paid literally millions of dollars in fines and penalties rather than changing its behavior or meeting the conditions previously agreed to.

Breathless commentary about new technologies and changing markets cannot change basic economic facts. Companies like SBC and AT&T, with massive market power and control of bottleneck, “last mile” facilities and huge chunks of valuable wireless spectrum, have both the incentive and ability to use their market power to harm consumers, competitors and even product vendors, some of whom operate small entrepreneurial businesses right here in Wisconsin.

SBC and AT&T also offer contrived arguments that there is already plenty of communications competition coming from wireless, unproven voice-over-the-Internet (VoIP) providers, or even their arch nemesis, cable.

If you remain unconvinced this merger is going to have much of an impact on your daily communications needs or your bank account, consider who owns the wireless company suggested as an alternative—in SBC and AT&T’s case, it’s the same corporate entity, operating as the nation’s number two wireless provider, Cingular.

If you work for or own a business in Wisconsin, have a home or rent an apartment, simply ask yourself if you are ready to forego the network reliability, the customer care and the historical quality of wireline communications for something that may or may not work in a rainstorm, in certain locations within your office or residential building, or even allow you to call 911 in an emergency situation.

In analyzing these mergers, the US Department of Justice (DoJ) and the Federal Communications Commission (FCC) play a pivotal role in deciding what’s best for consumers, small and large.

We believe and hope Wisconsin consumers will begin questioning whether or not the public interest is being served by this corporate consolidation.

If you have reservations on the merits of the SBC/AT&T merger and what it means for telecommunications consumers in Wisconsin, get involved. Send a letter to the FCC in Washington, or better yet an email, highlighting your views. The FCC can be reached at www.fcc.gov.

Additionally, Members of Wisconsin’s Congressional delegation are in prime position to exert both leadership and political pressure on the newly appointed leadership of both the FCC and the DoJ to do what’s right for consumers. Contact them as well.

TDS Metrocom certainly realizes how difficult it is to contemplate the magnitude of this acquisition during these busy summer months. Having said that, contemplate for a moment how this proposed corporate marriage, literally the rebuilding of the previously fallen telecommunications Humpty Dumpty, will impact you as a business or residential consumer, not to mention your finances.

Simply put, the irony of a Baby Bell acquiring Ma-Bell should not be disregarded.

— Jim Butman is President-Competitive Telephone Operations for TDS Telecom. Drew Petersen is Director-Legislative Affairs.

TDS Telecom is the parent company of local competitor TDS Metrocom, headquartered in Madison, Wisconsin.