Nader Pans Another Merger - AT&T/TCI

(June 29, 1998)  Ralph Nader, in a letter to FCC Commissioner William Kennard dated today, criticized yet another telecommunications merger.  Nader asserts that the merger of AT&T and TCI would provide new opportunities for AT&T to bundle products and services to the detriment of consumers.

The letter from the Consumer Project on Technology is signed by both Ralph Nader and CPT Director James Love.  Their main allegation is that by combining a long distance telephone and Internet access company with a cable company, the merged entity will have more opportunities to bundle products and services.  The two argue that it is likely that AT&T would soon tie together the sale of products and services which it has a monopoly over, with those that it does not.  And this, Nader and Love assert, would be bad for consumers.

The letter alleges that:

"Given AT&Ts history in anticompetitive actions, and TCI's enormous reputation for anticompetitive actions in the cable television market, it is prudent to expect bundling strategies to be used an anticompetitive ways against rivals."

William Kennard, who is Chairman of the Federal Communications Commission, has already spoken favorably about the merger.  Last Wednesday, Kennard stated:

If AT&T and TCI make a strong commitment to bring residential consumers more choice in local telephone and high speed Internet access services, then this proposed merger is eminently thinkable.

Since AT&T and TCI offer different products and services, the merger would not lead to any further concentration, and thus is not likely to be opposed by government regulators at the FCC, Department of Justice, or Federal Trade Commission.

Thus, AT&T is likely less worried about Ralph Nader than it is about the drop in its stock price since announcement of the merger, and criticism from investors and others that the $31.8 Billion purchase price is too high.

Nader's organization has long criticized the pending WorldCom merger with MCI.

Nader's letter to Kennard concluded that:

"At a certain point of inbreeding, the genetic stock begins to suffer, along with the vigor of competition and innovation. And at a certain point, a giant company or oligopoly has so much power that it is unduly risky for firms or even government officials to risk challenges of core economic interests. These issues, which we believe are both real and obvious, and which are certainly on the minds of alert consumers, should be addressed by the Commission."

Nader wants the FCC to schedule public hearings to debate his concerns about the AT&T/TCI merger.