- The Washington Times - Thursday, February 3, 2000

The AOL Time-Warner merger may be grabbing the most headlines, but other high-profile mergers in recent months are just as exciting in the innovative and cost-saving services they can afford consumers.

First though, government regulators must approve them a process that could take a year or more. In the fast-paced world of high technology and telecommunications, are government bureaucrats competent to scrutinize such corporate marriages? The government still thinks it has the necessary knowledge and vision, but this is a delusion, and one that will only delay bringing greater efficiencies to market.

Consumers, workers, the entrepreneurial sector and the economy in general have all benefited from the high technology and telecommunications sectors. But, as these industries change the way Americans work and play, turf-conscious regulators have come to fear for their own relevancy.

Even the obviously beneficial trends produced by high tech have come under fire from regulators. The Labor Department quickly found out it crossed the common-sense line when it sent a guidance letter to a Texas-based business, declaring the company responsible for the safety of home offices used by its telecommuters.

Teleworkers nationwide organized quickly and expressed their outrage to Washington with lightning speed (another beneficial upshot of innovations in the high-tech and telecommunications sectors).

Alienating some 17 million to 19 million teleworkers in an election year is not a smart political move, so the department withdrew the letter. Home-office inspections have been put on hold, at least for another year.

Working at home and starting a business with greater ease are two of the countless benefits that individuals have reaped as a result of advanced telecommunications services and high-technology products. Regulators now boast about moving in "Internet time," but it is with good reason that business should be doubtful of such claims, and why consumers should be concerned about this supposed fast-track meddling as well.

The Heartland Institute estimates that the direct cost to the private sector of dealing with regulators during the tortuous merger review process was $12 billion in 1996.

"The indirect cost of regulatory delay lost products, innovations and efficiencies that would have come about had mergers been completed rather than crippled by premature publicity or canceled due to the threat or cost of regulatory interference are much larger," according to a report by the group.

The realignment within the telecommunications industry is currently under intense scrutiny, and unfortunately it comes at a critical juncture in this sector's transformation.

Response, for example, to the MCI Worldcom and Sprint merger was sadly predictable. Federal Communications Commission Chairman William Kennard was downright despondent, warning the companies "bear a heavy burden in proving the merger will be good for consumers." We would assume the business minds behind the $129 billion deal thought through this notion and would not have risked it unless they believed the merger would offer something consumers want and need.

Mr. Kennard's rash bias was conveniently supported by a hastily prepared analysis he requested from an FCC senior researcher. The memo, leaked to The Washington Post, termed the alliance "intolerable" even though the regulator who prepared it acknowledged he knew "little about the 'proposed' merger."

Mr. Kennard has since pledged objectivity (after his staff member recused himself from the case), promising not to move until Justice Department review. Great news? A "source" in this agency pronounced the merger dead on arrival to the same reporter for The Washington Post.

All this fuss is about concentration in the traditional long-distance market. That is a "perception that is way out of date," remarked MCI Worldcom CEO Bernard Ebbers at a National Press Club speech on Jan. 12. "When compared with other major carriers in the all-distance market, MCI Worldcom and Sprint rank as Nox. 4 and 7," he added. Big companies are simply reorganizing themselves to provide all-distance packages of services local, long-distance, international, data, Internet, wireline and wireless thus fulfilling the promises of the Telecommunications Act of 1996.

Sympathizing with Mr. Kennard, we can understand his frustration as the local Bell monopolies have thwarted both the spirit and intent of the landmark legislation. Choice in local phone service is still not a reality, but movement in this market is under way as competitive pressure on the Bells has finally forced them out of their protectionist mode.

However, launching a strike on one long-distance provider is misguided. Indeed, hundreds of small companies have been born since 1996, and they have invested heavily in cutting-edge technologies to offer consumers packages of all-distance services. With more than 600 long-distance providers (19 ranked in the Fortune 500), it's fair to say this is a competitive market.

To date, consumers and our economy have been the ultimate winners in the growth and innovation in the converging telecom and high-tech sectors. Today's savvy consumer can competently root out the bad apples from the good and bureaucrats in Washington shouldn't needlessly disrupt bringing cost-saving products to market.

Karen Kerrigan is chairman of the Small Business Survival Committee.

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