Monopoly Reborn in Telecom Business

By Gus Tyler

Published March 04, 2005, issue of March 04, 2005.
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In 1984, the courts made a historic decision in America’s longtime battle to “bust the trusts.” The American Telephone and Telegraph Company was ordered to break up into many small pieces to restore competition in our “free enterprise” society.

Now it appears that the monopoly once held by AT&T is being restored — albeit under another name. It will fall under the auspices of an outfit that is a merger of two telecommunication giants, as Verizon Communications buys up SBC Communications.

None of this perversion of the “free enterprise” ideal should come as a surprise, however.

The tendency in a supposedly competitive economy toward merger and monopoly was noted by the great Adam Smith, author of the epic book “The Wealth of Nations,” way back in 1776, when he wrote:” People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy… to raise prices.”

In the closing decade of the 19th century in the United States, in a time dubbed as ‘the age of the ‘robber barons,’” Congress moved decisively to curb the trend toward monopolies when it passed the Sherman Antitrust Act. But, irony of ironies, the first organization to be charged with violation of the new law was a labor union, the Danbury Hatters, who were charged, when they went on strike, with a “combination… or conspiracy in restraint of trade and commerce.” The union and its members were fined triple damages for the losses of the companies involved.

There was such a hue and cry that a few years later, it was necessary to pass another anti-trust law that specifically absolved labor unions.

Then the courts put a neat new twist on the interpretation: They began to decide when a monopoly was good for the country and when it was bad. Which meant that the judge or judges in the case could, by their own judgment, enforce or invalidate the law.

While the unification of telecom is, like almost all other trusts, a way to fix prices through monopoly, oligopoly or cartel, it is in another respect, more pernicious. It tends to create a monopoly in that sector of the economy that plays a major role in shaping public opinion.

At present, however, the phone mergers do not enjoy such a monopoly in the making of the public mind, because the telephone business is challenged by the cable system that offers the merged telephone business a real challenge and real competition. Indeed, the cable crowd is also moving out to cut into the field of telephonic services directly.

But we have not heard the end of the story yet. In this age of mergers and acquisitions, what is there to keep the two mammoth moguls in telephone and cable from merging?

What a golden opportunity to brainwash a nation that once prided itself on using the public airwaves to expose its citizens to the kind of diversity of opinion that is the life of a democratic society.






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