Competition on Hold

Zero Tolerance for corporate mergers if they make phone bills go up. That's how we read a message that the nation's top telephone regulator wants the government to send. And it's one that consumers want to hear. They remember that monopolies were once split up to increase competition. They boggle at promises of new competition if vast companies unite to become vaster.

They have a friend in Reed Hundt, chairman of the Federal Communications Commission. He has been speaking out amid unconfirmed talk about what would be the biggest corporate merger ever: the marriage of AT&T, the No. 1 long-distance company, and SBC Communications, largest of six regional so-called Baby Bells and supplier of local phone service in such cities as Los Angeles and Dallas.

Last year's telecommunications law was supposed to open the way for long-distance and local companies to compete on each other's turf. Lawmakers are disappointed by lack of competition under this deregulation.

But the possibility of a long-distance carrier merging with a Baby Bell would be "pro-competitive," said AT&T chairman Robert Allen recently, naming no names. The question is whether an AT&T, when merged with an SBC, would compete for local service in those big SBC markets.

Last week FCC chairman Hundt, a former antitrust lawyer, used a major speech on antitrust to say a combination of AT&T and a Baby Bell is "unthinkable." An AT&T reply said any merger proposal should be evaluated on whether it accelerates competition in local markets.

But the interests of both corporations and consumers could be served by knowing where things stand before giant, dubious mergers go too far. Mr. Hundt is on the right track when he says the government should develop "clear and predictable" merger guidelines. Otherwise, the government "will send a message of tolerance to those firms that wish to test the limits of merger policy in newly opened or changing markets."

The message should be: no tolerance for using deregulation to avoid competition. And this message should not be left on "call waiting."

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