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The State View Of Telecom Mergers
by Chloe Albanesius
State officials this week turned their attention toward impending telecommunications mergers, with New York and California weighing in on how the deals will affect competition.
The New York State Public Service Commission on Wednesday unanimously approved the merger of AT&T and SBC Communications. Both companies have "complementary strengths, product offerings and customer bases," Commission Chairman William Flynn said in a statement. They will "spur continued growth and technological innovation in an increasingly competitive telecommunications environment in New York."
AT&T and its subsidiaries have about 375,000 access lines in New York, while Texas-based SBC provides service to some 3,700 access lines in the state. New York is the 32nd state to approve the merger; four approvals are pending.
In California, Attorney General Bill Lockyer weighed in on the proposed merger of MCI and Verizon Communications. In a Friday advisory opinion, Lockyer, a Democrat, wrote that the deal will not "adversely affect competition in the special access services markets" and found that the competitive effects on other relevant products will be "minimal."
But Lockyer is concerned that the merger will not "yield the great merger-related efficiencies that Verizon and MCI claim." His office is worried that the structure of the merger could provide "the incentive to engage in cross-subsidizations" between Verizon and companies not regulated by the California Public Utilities Commission (CPUC).
His office did not suggest rejection of the merger but only cautioned CPUC to "closely scrutinize Verizon's post-merger transactions." CPUC will consider a draft decision on the matter Nov. 18.
The announcement came after Washington Attorney General Rob McKenna on Sept. 9 filed testimony with his state's Utilities and Transportation Commission that gives consent for the MCI, Verizon merger, provided the two companies do not harm consumers.
The New Jersey Cable Telecommunications Association (NJCA), meanwhile, criticized Verizon on Tuesday. The company recently announced the addition of 12 towns to its list of 54 state communities where it wants to offer video service. Those 12 towns, however, heavily favor affluent, northern New Jersey and ignore moderate-income residents and the state's southern consumers, according to NJCA.
Verizon successfully obtained statewide franchising in Texas this month and plans to pursue similar legislation in New Jersey when the legislature reconvenes in November, according to a spokesman. "By pushing for a statewide franchise that cuts local government out of the picture, Verizon is asking state lawmakers to look the other way while it builds wherever it chooses," NJCA President Karen Alexander said.
"The benefits of video competition could come quicker if we could find a state or even a national solution to this franchise issue," Verizon Chairman and CEO Ivan Seidenberg said in a Tuesday speech to the Chief Executives Club of Boston. "Any new taxes," like the policy being considered in Boston that could cost telecom companies more than $140 million a year, is "a step in exactly the wrong direction."
Techies Comment On 'Open Source' Plan
The technology industry has commented on Massachusetts' plan to require agencies to install by 2007 applications that support an "open source" software format allowing users to see and alter underlying code.
Microsoft sounded the loudest alarm bells. It said in public comments that XML, a simple, flexible text-publishing format, "is the ideal format for data interoperability, storage, management and public records." But General Manager Alan Yates took issue with the state's definition of "open formats," which he said "mandates adoption of a single, immature format." The state said the open-source format it selected "has been in use for several years."
IBM issued its support. "We think your target date for implementation, 2007, is aggressive but understand the need to set a stake in the ground to begin this important migration to open standards," said Robert Sutor, vice president of standards and open source.
Sun Microsystems CEO and Chairman Scott McNealy not unexpectedly said the plan "is enlightened." And Ed Black, president and CEO of the Open Source and Industry Alliance, said the proposal "promises relief from [software] vendor lock-in."
Several market-based technology organizations were less than enthused. The state administration has not assessed the cost "of moving to a technology that is unfinished, untested and unavailable commercially," Jonathan Zuck, president of the Association for Competitive Technology (ACT), said at a Friday Massachusetts Software Council meeting. Microsoft is an ACT member.
Jim Prendergast, executive director of the Microsoft-backed Americans for Technology Leadership, called the plan "bad public policy."
Virginia Center Assessing Gaps In Innovation
Virginia's Center for Innovative Technology (CIT) is preparing to release an assessment this fall on existing gaps in innovation.
The state-chartered nonprofit has been working since 1984 to buoy Virginia's tech industry. On the domestic front, CIT is working with the National Security Agency to identify challenges faced by tech companies.
The federal government has a "desire to know where the innovative companies are," CIT President Peter Jobse said during a Monday interview at the Commonwealth of Virginia Information Technology Symposium in Richmond. The organization also is partnering with European officials to identify advanced technology.
Jobse praised federal efforts to encourage growth in the tech sector, including a reimbursement plan for science and engineering students from Rep. Frank Wolf, R-Va., and a research and development package from Sens. George Allen, R-Va., and John Ensign, R-Nev.
At the state level, lawmakers can have the most positive impact on CIT's goals via spending and tax-related bills, Jobse said. Investing in public-private partnerships and providing seed capital "helps mitigate risk," he said.
Jobse acknowledged that state legislators "come from all walks of life" and might not understand what additional funding could do for the commonwealth's tech sector. Most, however, "can see what has changed in their lives" thanks to technology, and "a majority of the General Assembly understands the value of technology."
Also in Virginia, Gov. Mark Warner on Wednesday assisted with the installation of fiber at a connection point in the state's 700-mile, high-speed Internet network. The governor, a Democrat, also broke ground at six additional sites in southern Virginia.
Maryland Gov. Robert Ehrlich will be in Edgewater on Friday to begin the state's "Broadband for Everyone Week." And in Michigan, Gov. Jennifer Granholm appointed George Franklin and Frida Waara to the state's broadband development authority. Franklin is a former vice president of worldwide government relations with Kellogg, while Waara is a co-owner of OnCue Productions.
Meanwhile, Missouri Gov. Matt Blunt on Tuesday awarded a customer-service award to the state's telecom access program. The program has worked since 2000 to upgrade telecom equipment for residents with disabilities, and Missouri now serves four times as many disabled consumers as it did five years ago.
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