AT&T, Cingular Merger Could Lead to Higher Prices

For Immediate Release
Tuesday, Feb. 17, 2004
Contact:
Susan Herold, 202-462-6262

AT&T, Cingular Wireless Merger Could Lead to
Higher Prices, Poorer Services

(Washington, D.C.) – Today’s proposed merger between Cingular Wireless – which is owned by two of the largest Bell local telephone companies – and AT&T Wireless points to a dangerous consolidation trend that ultimately could lead to higher prices and poorer service for cell phone customers, Consumers Union warns.
“This deal is a lose-lose proposition for consumers,” said Chris Murray, legislative counsel for Consumers Union, publisher of Consumer Reports. “With number portability, cell phone companies have begun to offer better deals to consumers who now have more freedom of choice. A move toward greater consolidation cuts at the heart of this growing competition in the telephone marketplace. We can expect to see fewer deals and higher prices, just as we’ve seen with the mergers of cable companies.”
Added Murray, “Competition from the wireless industry in some cases has helped keep rates down for long distance and one day could be a strong competitor for local phone service. This merger will limit this growing competitive pressure.”
The proposed merger comes at a time when service quality is suffering in the cell phone industry. A survey of 12 metropolitan areas published in the February 2004 Consumer Reports showed fewer than 50 percent of respondents were highly satisfied with their cell-phone service. The survey found that both AT&T and Cingular had problems with overloaded circuits in several cities.
Murray said the merged cell companies, which would be owned by SBC Communications and Bell South, will be able to offer a bundle of services that virtually no other company can compete with in their territories — combining wireless, local and long distance telephone, and even broadband Internet services.
“We will oppose this merger unless there are significant modifications that do not allow the combined companies to constrain competition in markets where SBC or Bell South is the dominant local telephone provider,” he added.
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Consumers Union, publisher of Consumer Reports magazine, is an independent nonprofit testing, educational and information organization serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition, and other consumer concerns. Since 1936, our mission has been to test products, inform the public, and protect consumers.