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This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).

June 19, 1997


In remarks today to the Brookings Institution, FCC Chairman Reed Hundt, responding to what he called AT&T's invitation to discuss publicly a hypothetical AT&T-RBOC merger, said that such a merger was "unthinkable" under antitrust laws.

Hundt noted that public debate of such mergers is important because, "We are at a watershed point in the evolution of the telecommunications industry. Whether we have competitive or monopolized markets depends on the interactive and complex decisions of private firms, investors, Congress, agencies and courts. At stake is the possibility of billions of dollars of economic growth and astounding feats of innovation only achievable through competition."

Hundt stated that, "Combining the long distance market share of AT&T in any RBOC region (even as it may be reduced by RBOC entry) with the long distance market share that reasonably can be imputed to the RBOC yields a resulting concentration that is unthinkable."

Hundt, who spent 20 years as an antitrust lawyer before coming to the Commission, continued that "[If we impute] to AT&T even a modest percentage of [local] market share taken form the existing Bell incumbent in that Bell's region, as we must do under our potential or precluded competitor doctrine, then under conventional and serviceable antitrust analysis, a merger between it and the Bell incumbent is unthinkable."

Commenting on a hypothetical AT&T-RBOC combination out-of-region, he went on to state that, "there could be risky "spillover" effects of such an out-of-region combination. Could the RBOC and AT&T management teams reasonably be expected to collaborate and share their best-developed business secrets and strategies out of the RBOC region even while using those same tactics and strategies against each other in the RBOC region? Could the RBOC join AT&T in pressing for its legal rights as an entrant out-of-region to be upheld at the FCC or in court, while arguing in the same forums against AT&T when the dispute concerned an in-region issue?"

Hundt also noted that, "Contemplating, discussing, negotiating and proposing unthinkable mergers can have negative impacts on competition. During the period of negotiation and subsequent regulatory scrutiny and likely court challenge, local competition plans and actions can be seriously slowed down."

Quoting Teddy Roosevelt, Hundt concluded, "The true function of the state .... should be to make the chances of competition more even, not to abolish them."

-- FCC --