Magazine article Insight on the News

Never Fear: Bell-TCI Deal Will Bolster Competition

Magazine article Insight on the News

Never Fear: Bell-TCI Deal Will Bolster Competition

Article excerpt

The announcement that Bell Atlantic Corp. will purchase Tele-Communications Inc. is the largest example of the convergence that has been occurring for several years in the communications marketplace. The lines that have traditionally separated companies providing telephone, cable television and entertainment services have blurred and within the next few years will vanish altogether. As a result, competition will arise in industries that are now monopolies, with consequent benefits for consumers.

Some argue that the Bell Atlantic-TCI deal is too big and, therefore, runs counter to consumer interests. In fact, it is very pro-consumer.

The merger occurs within two industries in which there is virtually no competition. With rare exceptions, the cable industry operates as a monopoly nationwide. The same is true for the providers of local telephone service. In neither industry does the consumer have a choice of providers. Therefore, the acquisition will not restrict competition and consumer choices.

Moreover, the merger will occur between two companies that are in very different businesses and will operate in different parts of the country. Bell Atlantic offers telephone service; TCI owns cable systems and cable TV programming interests. TCI-owned cable systems in the area where Bell Atlantic offers telephone service will be divested before the acquisition becomes final. Because there will be neither business nor geographic overlap, the argument that there will be no hindrance to competition becomes even stronger.

Some will say that because Bell Atlantic now will have access to about 40 percent of all American homes through its telephone network or the TCI cable network, it has the potential to monopolize the delivery of information. That argument also lacks merit. In virtually all those homes, a second wire owned and controlled by another company provides an avenue for competing services. In the TCI cable area, that second wire is owned and controlled by the existing telephone company, and in the Bell Atlantic service territory, the second wire is owned and controlled by the existing cable system. Accordingly, Bell Atlantic's enhanced access to American homes will not stifle or monopolize the flow of information. …

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