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Wednesday, Jul. 29, 1998
Another mega-merger `all-in-one' vision
Bell Atlantic and GTE promise voice, data and Internet services
By DAVID KALISH
Associated PressNEW YORK -- Bell Atlantic Corp. and GTE Corp. weighed in Tuesday with a numbingly familiar mega-deal: A $52 billion agreement to form the nation's second-largest telephone company, promising an array of advanced voice, data and Internet services to millions of Americans.
With four announcements of multibillion-dollar marriages this year alone, the telecommunications industry is quickly shrinking into a small circle of global companies peddling the all-in-one vision.
It's an enticing sales pitch, but one that has mostly passed by typical home customers. The big telecommunications companies so far are focusing on the more lucrative business of selling bundled services to corporations.
And some consumer advocates expect that the union of two more potential competitors would eventually drive prices higher. Gene Kimmelman, co-director of the Consumers Union's Washington office, urged antitrust officials and the Federal Communications Commission to block the deal.
The merger ``looks like another nail in the coffin of local telephone competition,'' he said.
``There's no question in either of our minds (the deal is) pro-competitive, pro-consumer,'' GTE's top executive, Charles R. Lee, 58, said at a news conference announcing the deal. Lee would be the new company's chairman as well as co-chief executive along with Bell Atlantic CEO Ivan Seidenberg. Seidenberg, 51, who also will be president of the combined company, would take over as sole CEO in three years.
Federal regulators appeared to take a wait-and-see attitude. And the chiefs of the two partners argued their marriage ultimately would benefit customers, saying their combined heft would hasten the delivery of advanced services to Bell Atlantic's region. GTE is a unique hybrid offering local and long-distance service to mostly suburban and rural customers in 38 states.
Bell Atlantic and GTE hope to vastly boost sales of GTE's offerings of speedy data services to Bell Atlantic's business customers, from Maine to Virginia. And Bell Atlantic, which has lagged in offering Internet services to its customers, hopes to use GTE's expertise to sell high-speed Internet access to its 41 million customers.
William E. Kennard, the chairman of the FCC, held off on judging the deal, unlike his predecessor, who effectively killed a potential purchase by AT&T of SBC Communications last year.
Unlike AT&T's dominant share, GTE's long-distance operations are far smaller and only overlap in a small percentage of Bell Atlantic's territory, meaning that the combined entity wouldn't control many areas.
``I hope the parties will demonstrate how this merger advances the pro-competitive thrust of the Telecommunications Act,'' Kennard said in a statement.
Still, others were more critical. After Bell Atlantic's marriage, only four of the original seven Baby Bells would remain from the 1984 breakup of AT&T Corp. Bell Atlantic is itself the result of combining last year with Nynex Corp. into the nation's largest Baby Bell.
The latest merger would have 63 million local telephone lines in 38 states and revenue of $53 billion. Only AT&T, once it completes its planned acquisitions, would be a bigger telephone company.
Rep. Edward Markey, D-Mass., argued that regulators and antitrust officials should force Bell Atlantic to more fully open its markets to new local-phone competition ``before considering further mergers of monopoly local telephone providers.''
Some analysts speculated that regulators may push the partners to shed some assets to pass muster, particularly after nudging MCI and WorldCom to divest several Internet businesses to get their pending merger through.
For example, regulators may ask Bell Atlantic and GTE to divest some mobile-phone businesses so the marriage won't shut out potential rivals and drive up prices of wireless service.
``There's no way they will be able to get this through the gauntlet of regulatory approval without having one or two chunks of flesh chopped off,'' said Ken McGee, an industry analyst with the Gartner Group research and consulting firm, based in Stamford, Conn.
In this year's previous deals, AT&T has formed a joint venture with British Telecommunications, agreed to buy leading cable TV company Tele-Communications Inc. and recently got federal approval to complete its purchase of Teleport Communications Group, a provider of local phone service to businesses.
Early this year, SBC Communications and Ameritech, two major local phone companies, agreed to merge in a deal valued at $60 billion.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web