Telcos Ask Congress to Open Antitrust Probe

Early last month, nearly two dozen telecommunications providers asked Congress to open a probe investigating whether the country’s biggest local phone companies violated antitrust laws by plotting an enormous lobbying campaign with equipment makers to deregulate the market.

“Indeed, this secret campaign appears to raise fundamental issues relating to antitrust law and specifically, whether it is merely a ruse to engage in conduct forbidden by antitrust law,” the companies wrote in a letter to members of the House and Senate judiciary committees. “Because the judiciary committees have primary jurisdiction over the antitrust laws and a strong interest in telecom policy, we urge you to open an inquiry into this matter.”

Jeff Lungren, a spokesman with the House Judiciary Committee, says, “We are giving the issue serious consideration.” He did not specify a timeline regarding when the committee would make a decision.

Margarita Tapia, a spokeswoman for Senate Judiciary Committee Chairman Orrin Hatch, adds, “The committee plans to review the letter and the allegations to determine what action, if any, are warranted.”

The RBOCs and their ally, the USTA, recently outlined plans to build a war chest to ask the White House, Capitol Hill and the FCC to abolish the current telephone and broadband regulations.

The Bells maintain there is adequate competition to significantly ease federal regulations they claim are based on the 19th century railroad model and require them to lease their networks below cost.

In an Oct. 17 memo circulated to SBC Communications Inc. President William M. Daley and other prominent Bell executives, USTA President and CEO Walter McCormick discussed plans to ask the country’s largest telecom equipment makers for millions of dollars to fund the campaign. As first reported by The L.A. Times, the memo was the subject of an Oct. 20 dinner meeting at the St. Regis Hotel in Washington, D.C.

In the memo, McCormick outlined plans to ask the largest equipment makers for up to $500,000 a year for three years to fund the lobbying campaign. “Carriers and manufacturers are interdependent,” the memo says. “If we grow ... we buy ... and then they grow as well.”

A USTA executive says the meeting was perfectly legitimate and violated no antitrust laws.

“Walter McCormick told the group before they started that this meeting would be a discussion about public policy and public policy only and would be conducted in strict accordance with antitrust laws,” says Tom Amontree, USTA senior vice president. “These telecom executives getting together to discuss public policy is identical in nature to our opponents getting together to send their joint letter to Congress.”

MCI Taps Rudman for Ethics

MCI has retained former U.S. Senator Warren B. Rudman as a senior advisor to Chairman and CEO Michael Capellas and MCI’s board of directors. Rudman will focus on ethics and corporate governance, assisting in completing and implementing MCI’s expanded corporate governance initiatives.

Verizon Reports Customer Growth

Verizon Communications reported strong customer growth and solid cash flow in its third quarter results. The company posted its fifth consecutive quarter of year-over-year revenue growth, as its overall revenue mix continued to shift to growth areas such as wireless. The financial increase was supported by significant customer additions in growth markets, as well as successful new marketing initiatives, which also offset competitive pressures on revenues in other areas of domestic telecom. Total third-quarter reported operating revenues of $17.2 billion were up slightly from third quarter 2002. Last year’s total included revenues from domestic telecom access lines the company has since sold.

MCI Reorg Gets the Green Light

Despite protests from competitors, MCI got the OK for its plan of reorganization from U.S. Bankruptcy Court Judge Arthur J. Gonzalez, setting the stage for MCI's emergence from Chapter 11. Many believe MCI’s move out of bankruptcy will only make it more difficult for the industry as a whole — which has struggled during the past three years with plummeting stock values, bankruptcies and fraud cases (MCI/WorldCom being the most sizable) — to stage a recovery. "This is a great day for MCI,” said Michael D. Capellas, MCI chairman and CEO. “Against all odds, we have reached our confirmation faster than anyone expected. Today's ruling is a real tribute to our 55,000 hard-working employees and our loyal customer base of 20 million strong.”

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