Idiot's Guide to the SBC-AT&T Merger

Tonight I checked the mail and found a postcard from SBC addressed to my roommate (because she pays that bill). On the front, it read, “VERY IMPORTANT: PUBLIC PARTICIPATION HEARINGS ON SBC-AT&T MERGER.”

I don’t even begin to be able to understand the negotiations between these two companies, but I’ve got a hunch that beneath the financial jargon, deregulation has once again allowed giant companies to grow even more powerful. SBC’s proposed $16 million buyout of AT&T will likely create a monopoly rush to stifle competition in the telecommunications industry.

Take a look at this excerpt from a financial analysis of the merger:

Allan Tumolillo, COO of Probe Financial Associates, also noted that although Verizon could "go it alone" and try to poach AT&T's customers, such a tactic would place the company at risk. "MCI has been put in play by the SBC-AT&T merger, and if Verizon doesn't make a play for MCI, someone else will -- and that places Verizon at a serious disadvantage."

Is it me, or does this sound like a chess match?

But as is true with chess, or any game, there is uncertainty, and this is the one true constant. And this is what bothers me about our business-centric government. We place way too much power with uncertainty, and deregulation has only made it more risky.

At the end of the announcement of the acquisition on SBC’s website, which is chock full of excellently written BS, I mean, PR about how the merger will create “immediate global leadership in the enterprise segment,” there is a section that really sums up my opinion about our trust in monopolies of uncertainty:

Cautionary Language Concerning Forward-Looking Statements

Information set forth in this press release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results might differ materially. Such statements include, but are not limited to, statements about the benefits of the business combination transaction involving SBC and AT&T Corporation, including future financial and operating results, the new company's plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of SBC's and AT&T's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements.

Try reading that whole paragraph without getting a headache. I don’t really get headaches, and I’m feeling on coming on after the seventh use of the word “statements.” Fine print is a 72-point font children's book compared to this. It’s repetitive to the point of being downright annoying. They want you to stop reading, deliberately crafting the language to get anyone who is still reading to stop. It’s like buying a toy, reading the manual, and then at the end it says, ‘Well, this toy may not work,” but in convoluted legal jargon. Or like some Weight Watcher’s commercial, results may vary. More like walking into a Vegas casino, “You probably won’t win.” I could go on with even worse examples, but what I’m trying to say is that a merger of two companies with a combined $32 billion in debt shouldn’t even be projecting such optimistic forward-looking statements in the first place. If you can, read the second sentence again. It’s disturbing. It feels very Enron. Not as deceptive, but it basically speaks the same language, the illusion of success to build confidence…in uncertainty.

Before I get even more discouraged, a prediction. And maybe I’ve got a lot to learn about the way the free market system works. My dad says I shouldn’t be so bothered by what we can’t control, but I can’t help it. No matter who wins the chess match, the losers will be consumer and small business interests and the thousands of Americans whose jobs are wiped out by the merger. And that’s all I have to say, until I show up at the public participation hearing.


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