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UNITY COALITION DENOUNCES BELL CO. CLAIMS REGARDING COMPETITION, JOBS IN THE TELECOMMUNICATIONS INDUSTRY AS FALSE, MISLEADING

UNITY COALITION DENOUNCES BELL CO. CLAIMS REGARDING COMPETITION, JOBS
 IN THE TELECOMMUNICATIONS INDUSTRY AS FALSE, MISLEADING
 WASHINGTON, June 9 /PRNewswire/ -- A diverse "Unity Coalition" of organizations today called upon Congress to act swiftly to promote growth and competition in the telecommunications manufacturing, long distance and information service industries by enacting H.R. 5096, the Antitrust Reform Act of 1992. The coalition accused the Bell companies of misleading Congress and the public through a paid media campaign claiming that the bill would adversely affect U.S. employment. According to the Bell companies' own annual reports, they have laid off more than 60,000 workers since 1984, the date of the AT&T break-up.
 The coalition (consisting of organizations representing consumers, business telecommunications users, competitive local telecommunications service providers, information service providers, telecommunications equipment manufacturers and long distance companies) noted that since the AT&T break-up, the Bell companies have experienced rapid growth in profitability with a decrease in employment. "The Bell company past practices and their future promises regarding employment are simply at odds," said Brian Moir, a spokesperson for the Unity Coalition. After describing the history of monopoly abuses by the Bells, the coalition predicted that Bell entry into, and future monopolization of, the three competitive lines of business would in fact cause an overall loss in American jobs.
 In 1984, the settlement of the largest U.S. government monopolization lawsuit led to the breakup of AT&T and the creation of seven Regional Bell Operating Companies (RBOCs). In addition to the breakup, the lawsuit prohibited these seven companies from entering into the telecommunications manufacturing, long-distance and information services industries, for fear that they would use their control of the local phone lines and their resulting monopoly profits to stifle competition in these industries. The Regional Bell Operating Companies now falsely argue that H.R. 5096 would threaten the financial futures of their companies and would cause domestic job losses.
 Nothing could be further from the truth, the coalition maintained. Gene Kimmelman of the Consumer Federation of America stated: "Since the breakup of the old Bell system, the RBOCs have enjoyed excessive financial success at the expense of ratepayers. Compared to all manufacturing industries in the U.S., their average return on equity since the breakup is over 2-1/2 percentage points higher than it had been prior to divestiture. As a result, ratepayers have been overcharged by more than $30 billion since 1984." Kimmelman added, "These numbers are particularly disturbing when compared with data on jobs, because the RBOCs have experienced no job creation, and in fact some significant job loss, in the period between their creation in 1984 and the present."(A)
 Coalition members explained that these data should not be surprising in light of the RBOCs' continued monopolistic practices. The RBOCs have consistently engaged in cross-subsidization, i.e., raising phone rates and using the profits to finance unregulated businesses. For example, NYNEX was recently caught inflating costs to ratepayers in order to purchase overpriced equipment and services from its own unregulated affiliate, thereby realizing millions of dollars in extra profits from an unregulated part of its business. Coalition members predicted that the phone companies will use anti-competitive practices to squash the emerging competition in the manufacturing, long distance and information service industries that have developed since the break-up. The coalition believes that H.R. 5096 is essential to protect American success in the telecommunications arena.
 The coalition highlighted the information services industry as an example. The U.S. Department of Commerce reported in its "1991 U.S. Industrial Outlook" that "The United States is the largest producer and consumer of electronic information services. Of the 4,000 databases available in the world, the United States produces 56 percent." The report noted that the information service industry "employed 2.4 million people in 1990 and indirectly supported another 2.7 million jobs," and that U.S. services "have traditionally maintained a positive trade balance." Barring any serious downturns in the world economy, the report predicted that the industry will have an average annual growth rate of 20 percent through the next five years.
 Coalition members contrasted the existing robust markets with the likely impact of Bell entry. Referring to manufacturing as an example, members cited a December 1989 internal Department of Labor (DOL) study which concluded that entry by the RBOCs into the manufacturing business would lead to a significant decrease in domestic manufacturing jobs. For example, the study shows that 18,000 to 27,000 domestic jobs would be lost in the central office switching industry alone if the Bells are allowed to enter into manufacture.
 "Without legislation like H.R. 5096, the RBOCs will be able and willing to finance their entry into increasingly competitive markets using ratepayer money," according to Moir. "Robust industries will be depleted, consumer choice diminished, and jobs will be exported and lost," Moir concluded.
 (A)
 RETURN ON EQUITY
 (In Percent)
 1957-1983 1984-1991
 Bell System/RBOCs 10.7 13.2
 All Manufacturing Industry 11.7 11.5
 Total Employment
 Date of Divestiture 1991
 (Jan. 1, 1984)
 All RBOCs 583,000 518,916
 -0- 6/9/92
 /CONTACT: Brian Moir for the Unity Coalition, 202-775-5661/ CO: ST: District of Columbia IN: TLS SU: LEG


DC -- DC017 -- 8408 06/09/92 14:08 EDT
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Date:Jun 9, 1992
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