Nader, Nicholas Johnson & others oppose BA/TCI merger

[James Love <love@essential.org>]

TAP-INFO Internet Distribution List

Taxpayer Assets Project
Information Policy Note
October 20, 1993

	Ralph Nader; former F.C.C. Commissioner Nicholas Johnson;
	James Love, Center for Study of Responsive Law; Jeff Chester,
	Center for Media Education; and Johnathan Motl, consumer lawyer,

	write Anne Bingaman, Assistant Attorney General for Antitrust, 
	Department of Justice, opposing Bell Atlantic/TCI merger        

fmi.  michael ward 202/387-8030; james love 215/658-0880

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                              MEMORANDUM

October 19, 1993

TO:        Honorable Anne K. Bingaman
           Assistant Attorney General for Antitrust
           U.S. Department of Justice
           Washington, D.C.  20530

FROM:	Ralph Nader

  	Nicholas Johnson, former commissioner, Federal Communication 
	Commission, fomer commissioner, Iowa City, Iowa -- Broadband and 
  	Telecommunications Commission, Chair, National Citizens 
	Communication Lobby

   	James Love, Director of Economic Studies, Center for Study of 
	Responsive Law

	Jeffrey Chester, Center for Media Education

   	Johnathan Motl, consumer lawyer

SUBJECT:         Bell Atlantic - Tele-Communications, Inc.  Merger


      We are writing to urge the Antitrust Division to oppose the
proposed merger between Bell Atlantic and Tele-Communications,
Inc. (TCI), as well as other announced telephone/cable industry
mergers.  Our concern is that such mergers will reduce
competition in markets for information services.

      The Congress and the Executive branch have rightly expressed
a desire to promote competition in telecommunications markets,
but too often this discussion has failed to address the most
important competitive issue, which is the market for information
"content," as opposed to information "conduit" services. 
Competition in content markets should be a paramount concern of
policy makers, since our society depends on a diversity of
expression and the freest exchange of ideas.

      Currently the cable television industry is allowed to own
both the "content" and the "conduit" for cable television
services.  The predictable result has been attempts by the large
cable companies, particularly Time-Warner and TCI, to leverage
their monopolistic control over local franchise services (the
conduit) to obtain monopolistic control over cable programming
channels (the content).  As you know, the cable industry is not
regulated as a common carrier, and the two large franchise
owners, TCI and Time-Warner, can clearly make or break a
programming service.  News reports on this topic are so abundant
that this point seems completely obvious.  Consider, for example,
the widely reported fact that General Electric was not allowed to
offer CNBC as a news format channel, since TCI and Time-Warner
are large shareholders in Turner Broadcasting, which owns CNN. 
Likewise, CBS recently complained that its efforts to obtain a
news channel in return for carriage of its broadcast signal was
blocked by the large cable operators.  If GE or CBS can be kept
out of a market by TCI or Time-Warner, what can a much smaller
independent firm hope for?

      The two recent private antitrust actions by Viacom against
Time-Warner and TCI provide additional illustrations of the
specific types of anti-competitive practices that result from
vertical integration in the cable market.  Viacom claims, for
example, that as the nation's largest owner of local cable
franchises, TCI "refused to carry (Viacom) programming," and
"extracted onerous terms as a condition of carriage," while they
"unfairly favored their own programming services."  According to
Viacom, "without access to Malone's cable systems, cable network
programmers cannot achieve the `critical mass` of viewers needed
to attract national advertising or a sufficient number of
subscribers required to make the network viable."  Viacom claims
that TCI said it would "crucify" Viacom's Showtime and Movie
Channel services if Viacom did not agree to "extortionate
concessions," and that TCI had withheld an affiliation for
Viacom's SNI programming in order to force Viacom to merge SNI
into TCI's Encore Media, on terms favorable to TCI, or to
eliminate or weaken SNI as a competitor to TCI's Encore Media.

      Given TCI's track record of anticompetitive abuses, it is
alarming that they are proposing to merge with Bell Atlantic,
providing the new merged entity with even greater power.  As you
know, Bell Atlantic is proposing to offer Video Dial Tone
services, under FCC rules that will allow Bell Atlantic to own
video programming services.  In the absence of more effective
common carrier protection, the larger combine market power of TCI
and Bell Atlantic will adversely affect independent providers of
information, and lead to less competition and less diversity in
information services markets, harming consumers.  We urge you to
oppose the Bell Atlantic TCI merger.


      Thank you for your attention to this matter.

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