Trade Groups Ask N.Y. Attorney General to Open Antitrust Investigation

Trade groups representing several telecommunications providers on Monday asked New York State Attorney General Eliot Spitzer to investigate claims that the country’s largest phone companies violated state antitrust laws by plotting a $40 million fundraising campaign with equipment makers to deregulate the market.

The CompTel/ASCENT Alliance, Association for Local Telecommunications Services and 11 other associations and companies signed the letter to Spitzer.

Last month, nearly a dozen firms called on Congress to open probes into whether the regional Bell operating companies illegally collaborated with vendors to build a war chest designed to pressure the federal government to abolish the current telephone and broadband regulations.

The Bells grouse that current regulations stymie capital investment in equipment.

The United States Telecom Association, the trade group representing BellSouth Corp., SBC Communications Inc. and Verizon Communications Inc., says there was nothing illegal about the meeting – and an Oct. 17 memo - first reported by The L.A. Times.

"These allegations are baseless and malicious," says USTA senior vice president Tom Amontree. "This was a meeting on public policy and nothing more. What you have here is a group of companies, who are afraid of real competition and consumer choice, organizing in a desperate attempt to change the focus of today's telecom debate because they know they can't win on the substance."

Spokespeople for the House and Senate judiciary committees said last month Congress would investigate the allegations. They could not be reached immediately Monday for comment. In the Nov. 14-20 edition of the Atlanta Business Chronicle, House Judiciary Committee spokesman Jeff Lungren was quoted as saying, "If Congress did start with a formal inquiry, it would have a chilling effect on public debate. This really appears to be protected First Amendment speech."

In a memo circulated to SBC Communications Inc. President William Daley and other prominent Bell executives, USTA President and CEO Walter McCormick outlined plans to ask the largest equipment makers for up to $500,000 a year for three years to fund the lobbying campaign.

"It would appear they are demanding at least rebates from them in order to prosecute a campaign against us," says H. Russell Frisby, Jr., CEO of the CompTel/ASCENT Alliance. "What happens if an equipment maker doesn't agree to participate? Does it [mean the] Bells stop buying equipment from that manufacturer."

Frisby says even if Congress does not find the Bells violated any antitrust laws, the meeting was "at least unseemly."

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