Tuesday, March 07, 2006

On the AT&T Acquisition of BellSouth: Expert Opinions, Disclosure, and the New Corporatism

by Tom Bozzo

My mind has been blown by the latest step towards the recombination of the old AT&T under the auspices of the new AT&T. That the deal is at all conceivable speaks mainly to the Bush administration's lax approach to antitrust, which is rather emphatically not the impression Stephen Labaton's article in this morning's NYT would have given you. The lede:
New York Times: Is Antitrust No Longer The Issue? As head of the Federal Communications Commission during the Clinton administration, Reed E. Hundt killed talks about a possible merger in 1997 when he said that a proposed deal between AT&T and SBC would be "unthinkable" under antitrust laws.

Last year those two companies combined with little resistance. And on Monday Mr. Hundt said that AT&T's proposal to buy BellSouth for $67 billion was "eminently thinkable," and that if he were still at the commission, "I would bless the deal."
The impression this provides is that allowing this deal is not just a matter of laissez-faire indifference to the accumulation of market power. Why, even a Clinton-era ex-regulator thinks it's kosher! It might have been helpful if Labaton had provided some indication of Mr. Hundt's post-FCC situation. From the Intel web site (Hundt is a director and chairs the Intel board's compensation committee):
Mr. Hundt is a principal of Charles Ross Partners, a private investor and business advisory service. He serves as an independent adviser on information industries to McKinsey & Company, Inc., a management consulting firm, and to The Blackstone Group, a private equity firm.
This is not to suggest that Hundt is offering a dishonest assessment, of course. But the investment advisory, private equity, and management consulting hats also make Hundt something other than an eminence grise called out of retirement for an expert assessment. It would have been appropriate for the Times to note Hundt's present employment situation.

Some interesting perspective on the proposed merger can be found at Oligopoly Watch (h/t Antitrust Review). Certainly, there are important changes since the nineties both in what would be the forward-looking technology for basic telephony and data services (both would presumably be IP-based), and the lineup of non-telco competitors in some reckonings. But there are important market segments where it's important to remember that cable-telco duopoly is not obviously tantamount to perfect competition.

But, to reiterate a point underlying my rant of a couple weeks ago, it's hard to see a deal like this passing muster in any less corporatist regulatory environment.
Minor defence of the acquisition: at least it won't be Verizon. Which is to say, people will be allowed to maintain their legacy-AT&T pensions.

Otherwise, there is very limited upside for workers or consumers. Until MSFT buys AT&T, of course, when all will be perfect.
Guess we'll all need to keep an eye out for Ed Whitacre and Ivan Seidenberg (and/or Bill Gates) goin' huntin.'
Post a Comment

<< Home

This page is powered by Blogger. Isn't yours?