Keep AT&T From Becoming a Monopoly, Again
Reducing the Justice Department's role in overseeing AT&T is a bad idea
P> Late last month the Department of Justice formally transferred authority for enforcing antitrust laws to the Federal Communications Commission. Let's put aside for now the FCC's staffing and budget problems, which in and of themselves raise serious questions about the agency's ability to handle a matter of such enormous complexity.
There is a larger issue at stake: Who is the biggest antitrust threat in this hypernetworked, information superhighway economy? How should that threat be examined and mitigated?
This is an old problem. For decades, IBM was the focus of Department of Justice antitrust lawyers. So, too, was AT&T and the Baby Bells spawned by Ma Bell's breakup. More recently, the Justice Department has cracked down on Microsoft.
But the stakes are higher now precisely because the convergence of computers and telecommunications is becoming a reality.
Telecom reform has forced the Justice Department to give up many decades of research and continuing investigation. The assumption is that AT&T is no longer the threat it once was. This is wrong and wasteful. Sooner or later regulators will have to duplicate that research at taxpayer expense once the true nature of the AT&T threat becomes apparent. By that time, it may be too late.
Competition alone cannot guarantee the interests of consumers and small businessmen who are the backbone of this nation -- that's why antitrust lawyers exist. No other company has AT&T's financial resources, its international network links, its broad technical expertise, its brand-name recognition -- in a word, its ubiquity.
Consider this excerpt from our cover story: "For one year, AT&T will give its phone customers five hours of Internet access a month through the dial-up service AT&T WorldNet -- free. People who go over that time limit, and businesses, would be charged more, as would non-AT&T customers who would now have an incentive to switch phone companies. AT&T business customers can get unlimited monthly service at $19.95 a month.
"If that doesn't draw in the reluctant surfer, this might: AT&T is also claiming responsibility to the dollar for any credit card theft while using its Internet service and the AT&T Universal Card. The service will be available via 200 locations to 80 percent of the country on March 14."
Who, but AT&T, could sustain that kind of loss leader in exchange for market share? No one -- not even Microsoft.
The Internet has spawned the greatest wave of entrepreneurship since the invention of the PC. Hundreds of small Internet service providers have emerged around the nation -- and most are clustered around the Beltway, the home of the Internet.
If regulators ignore AT&T, they do so at the risk of destroying the single most potent source of innovation and entrepreneurship in the nation today.