Oversight Hearing of the House Committee on the Judiciary: The Telecom Marketplace Nine Years After the Telecom Act
HEADLINE: OVERSIGHT HEARING OF THE HOUSE COMMITTEE ON THE JUDICIARY SUBJECT: THE TELECOM MARKETPLACE NINE YEARS AFTER THE TELECOM ACT
CHAIRED BY: REPRESENTATIVE CHRIS CANNON (R-UT)
WITNESSES: CARL GRIVNER, CEO, XO COMMUNICATIONS; BRIAN MOIR, ATTORNEY AT LAW; MICHAEL KELLOGG, KELLOGG, HUBER, HANSEN; PHILIP VERVEER, PARTNER, WILLKIE FARR AND GALLAGHER LLP
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Mr. SMITH OF TEXAS. I'm going to give Mr. Kellogg a chance to follow up on that. First of all, Mr. Kellogg, I want to read from the end of your prepared written testimony. You say, ''AT&T and MCI cannot survive as independent companies. The hundreds of CLECs started in the wake of the 1996 act cannot survive alone, either; and they are joining forces and consolidating into much stronger, more vibrant competitors. These are trends to be embraced, not resisted.'' And this is to follow up on a couple of the earlier questions you got regarding consolidation. but we've talked about numbers, we've talked about competition. We haven't talked about whether or not the consolidation actually helps the industry. We haven't talked about whether the consolidation will help America's competitiveness or not. Do you have answers to those questions?
Mr. KELLOGG. I hope so. On the issue of helping competition, I would point out that XO, for example, is an amalgam of CLECs. It has taken over a number of failing CLECs; taken over their networks, refurbished them; and turned itself into an incredibly vibrant provider of business services to large customers in over 70
markets around the country.
These companies focus on the large cities, because that is where the major customers are. They build fiber rings. They can afford to build out from those rings to the individual large customers. And there is no question in my mind that the reduction in number of CLECs is leading to a stronger marketplace. There's also no question in my mind that a combination such as that between SBC and AT&T, or Verizon and MCI, because their networks and their services currently complement one another, will make them much stronger, better competitors in an increasingly competitive global marketplace.
Mr. SMITH OF TEXAS. Okay. What about the impact of consolidation on consumers? Is it going to raise prices? Is it going to reduce the number of options that consumers have?
Mr. KELLOGG. I think it will actually increase the options for consumers, in terms of having viable players who are capable of building out across the country and competing in all the markets. You only need three to five to really jumpstart and promote competition, and I think there's no question we're going to have that sort of competition.
Mr. SMITH OF TEXAS. Okay. Lastly, maybe this is to follow up or give you a chance to expand an earlier answer. Why is USTA so supportive of the Trinko decision?
Mr. KELLOGG. Well, the Trinko decision really follows in the line of standard antitrust analysis. That's why it was a unanimous decision written by-you know, joined by all sides of that court; because they recognized that the ''essential facilities'' and ''refusal to deal'' doctrines have only a very limited role to play in antitrust.
Ordinarily, no one has an obligation to assist their competitors. You don't want them assisting; you want them to be competing with one another. Congress imposed certain obligations on the ILECs, to share their networks with them. But those are regulatory obligations; those are not a transformation, a fundamental transformation of the antitrust laws of the sort that the plaintiffs were attempting to obtain.
Mr. SMITH OF TEXAS. Yes. Okay. Thank you, Mr. Kellogg. Thank you, Mr. Chairman.
Mr. CANNON. Thank you, Mr. Smith.
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http://judiciary.house.gov/media/pdfs/printers/109th/20708.pdf