Phone Companies Ask Congress to Open Antitrust Probe

Nearly two dozen telecommunications providers on Friday 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, said Monday, “We are giving the issue serious consideration." Lungren did not specify a timeline regarding when the committee would make a decision. Added Margarita Tapia, spokeswoman for Senate Judiciary Chairman Orrin Hatch: “The committee plans to review the letter and the allegations to determine what action(s), if any, are warranted.”

Earlier this month, the regional Bell operating companies and their ally, the United States Telecom Association, 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 Bill 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 said Monday 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," said 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."

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