FUMO APPEALS PUC APPROVAL OF BELL-GTE MERGER
HARRISBURG, January 14, 2000 - Allowing Bell Atlantic and GTE to merge would be a setback to telephone competition in Pennsylvania and would benefit the companies at the expense of consumers, State Senator Vincent Fumo (D-Philadelphia) said in an appeal filed today with Commonwealth Court.
Fumo, who has been heavily involved in recent efforts to enhance local telephone competition in the state, is asking Commonwealth Court to overturn a Pennsylvania Public Utility Commission order, issued November 4, 1999, approving the merger.
Bell Atlantic is the largest local telephone service provider in the state and GTE the second largest. Despite state and federal laws passed in the last decade aimed at opening local telephone service to free-market competition, Bell has maintained an effective monopoly in its service territory. If the merger is permitted, the combined company would control 87 percent of the local access lines in the commonwealth.
Fumo believes the merger would allow Bell to solidify its hold on local phone service at the very time the state is attempting to promote robust competition to ensure that consumers will have the best service at the best price as the state enters a new high tech telecommunications era.
"The PUC decision should not stand," said Fumo. "It simply makes no sense to permit the two largest local exchange companies in the commonwealth to combine while we are still seeking the development of competition.
"This merger is anti-consumer, anti-business and anti-competitive."
In his appeal, the senator is asking Commonwealth Court to note that state law requires not only that utility mergers not be anti-competitive, but that they in fact affirmatively produce benefits for consumers, something which Bell and GTE have failed to establish.
After conducting hearings into the proposed merger, PUC Administrative Law Judge Morris J. Solomon recommended on September 28, 1999 that the PUC turn down the application from Bell and GTE, stating that the companies had "utterly failed" to meet their legal burden of demonstrating substantial consumer gain from the action. He concluded that the merger would be "anti-competitive."
The PUC disregarded his findings, opinions and conclusions and instead OK'd the merger. "It is important to note that the Commission's decision to approve the merger is contrary to the recommendation of their own Judge who presided over the case and explicitly stated that 'we have not seen a shred of evidence' that would warrant a finding that the merger is in any way in the interest of consumers," Fumo said.
In issuing its decision, the Commission relied largely on a Memorandum of Understanding among the state Office of Attorney General, Bell and GTE, in which the Attorney General claimed that the merger would provide substantial consumer benefits. That conclusion was based on an assumption that many issues relating to competition and consumers would be resolved by the PUC's Global Telecommunications Order (September 30, 1999), to which Bell and GTE would agree and be subject.
Fumo raised with Commonwealth Court two objections concerning the Attorney General's Memorandum of Understanding.
First, it was filed after the hearing process before Solomon had concluded, and that parties were not allowed to have further hearings, discovery or cross examination of any of the matters contained in the memorandum. That failure to allow a response to the memorandum denied Fumo and the other parties their rights of due process.
Second, Bell and GTE are challenging, in three separate appellate courts, the provisions of the PUC's Global Telecommunications order, even while claiming that the order resolves problems associated with its merger. In his appeal, Fumo argues that this "would permit Bell Atlantic and GTE to 'have it both ways' - to agree to conditions and still maintain the right to seek their elimination or modification" in appellate courts.
The deadline for filing the appeals in Tuesday.
Copyright 2000 Sen. Vincent J. Fumo