The end of competition in the US phone business?
"The traditional competition as we have known it is going out the window." That's the conclusion of a Forrester Research analyst quoted in a recent Wall Street Journal article called "Telecom Mergers Limit Choices Of Customers" (2/4/2005).
With the announced deal between SBC and AT&T plus the seemingly inevitable deal between MCI and either Verizon or Qwest, not to mention Sprint/Nextel and Cingular/AT&T Wireless acquisitions, there's no doubt that there will soon be fewer and fewer choices across teyh board.
That danger is greatest in the long-distance calling business. Soon-to-be-acquired AT&T has 31% percent of that market, so added to its current share, SBC will own about 40% of the market. Should Verizon buy out MCI, those companies will have over 20% of the long distance market.
The combinations will doubtless prove difficult for consumers and, especially, businesses. With a number of alternative services, companies have been able to negotiate aggressively for lower rates and improved services from long-distance companies. As the article points out, "The deals could leave many companies heavily dependent on one provider and force them to change negotiating tactics on the telecom service purchases."
Less obvious may be the effect on new technologies, especially Internet telephony (VOIP), AT&T has been a big proponent of VOIP as a way to bypass the local Bells. SBC's purchase, the article notes, will certainly slow down that initiative, or make it nearly as costly as regular phone service.
The article notes that the average household long distance bill has plummeted in recent years. "In 1995, the average household spent $32.78 a month on long distance. Now it is $13.70." Those savings may go away, as competition to the four baby Bells diminishes. Telephones may go the way of cable services, where their local monopoly has allowed them to keep raising rates and force unneeded services on subscribers.
As of now, there are still lots of very small competitors in long-distance, if you look for them. But given the increasing dominatiuon and political clout of these few super phone companies, the next step might be to make life harder for the little guys through regulatory changes or new fees.
11:51:09 AM 
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