It is in New York’s best interest to promote strong, reputable companies that provide jobs, support the local community and contribute significantly to our economy, said Business Council President Daniel B. Walsh in support of the merger proposals of Verizon and AT&T.
The comments were made during testimony at a public hearing on the mergers, Thursday July 28 at East Greenbush town hall in Rensselaer. In the proposed mergers, Verizon would acquire MCI and AT&T would merge with SBC Communications.
“These transactions are the next logical step in the ongoing evolution of the telecommunications industry around new technologies, new services and new providers,” Walsh said.
Rapid changes in technology are providing consumers with more choice in telecommunications services, he said: “Telecommunications choices are being widely provided not only by traditional wireline telephone companies, but also by the cable industry, broadband Voice Over Internet Protocol (VoIP) providers and wireless carriers.”
In addition, Walsh said, the availability of wireline and wireless packages of any duration, Internet communication (including instant messaging), text messaging and Voice Over Internet Protocol services has blurred the traditional distinction between local and long distance service.
“Wireline voice traffic no longer comprises the bulk of the time used on the public switch network, and such traffic is decreasing as a percentage of overall communications traffic,” Walsh said. “In light of these changes, a company providing only traditional wireline service could fast become obsolete.”
As a result, the industry is quickly restructuring to provide a full array of services using new and emerging technologies in the most economically efficient way, Walsh said. Verizon’s acquisition of MCI is intended to accelerate Verizon’s continuing transformation into a premier wireless and broadband provider. “It is a vital strategic move for Verizon that is focused on growth and continued investment, not just on cost reductions,” Walsh said.
Providing consumers with choices is essential, and New York State has more customer options available than almost any other state, Walsh continued. “These mergers are being examined, quite correctly, with an eye toward maintaining this important customer benefit.”
A united Verizon and MCI will have an estimated 16 to 22 percent share of the industry and will be just one of many companies competing for business in what is widely viewed as the most competitive segment of the industry, Walsh said. “There are many competitors in this field today, and none has acquired a dominant share of the market.”
“One important benefit of the MCI acquisition will be the increased ability of the combined company to compete on a national and international scale, including increased competition with SBC/AT&T,” Walsh said. “Verizon and SBC already operate as competitors today, and they will continue to compete with each other after their respective transactions, especially in the growth areas of enterprise, wireless, data and VoIP.”
The MCI purchase will have no adverse impact on rates or service quality, and will greatly enhance the abilities that both Verizon and MCI now possess individually to provide a wide array of services to consumers, businesses and government customers, Walsh said. The merger “will strengthen Verizon’s ability to compete for and serve large business and government customers in New York and elsewhere by improving the speed of delivery for competitively priced wireline services, broadband services, wireless services and IP-based services to that vital sector of the U.S. economy.”
Walsh also dismissed the suggestion that Verizon should not use MCI’s fiber optic use as a condition of acquiring MCI.
“We believe that this would be disruptive and potentially harmful to businesses that have chosen MCI from the slate of carriers because of its value,” Walsh said.
Wall Street is the financial capital of the world - and the telecommunications infrastructure is vital to the continued strength of the companies that operate there, Walsh said. “Denying these customers the choice of an advanced services provider by requiring the divestiture of MCI’s high capacity network in New York is unnecessary and disruptive to a number of businesses that are very important to the economic well being of this state.”
As technology moves forward, business are in need of customized telecommunications systems, Walsh said. The combination of AT&T and SBC Communications will allow the combined company to compete more effectively in this arena.
“Combined, AT&T and SBC will be better positioned for success within a rapidly changing industry, setting the standard for transition from legacy technologies to advanced, next-generation IP networks and services,” Walsh continued. “This merger brings in a new, well-established business player into New York State.”
With 52 million lines in13 states and revenues of $41 billion in 2004, SBC has been recognized as America’s Most Admired Telecommunications Company by Fortune Magazine seven years in a row, Walsh said.
Both Verizon and AT&T understand the needs of the communities in which they do business and they seek ways to keep these communities socially and economically healthy, Walsh said. "They are good corporate citizens, and their employees live and work in our communities, building partnerships that make a difference at the local level."