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U.S. Opinions: Miami

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Telecom merger mania

From an editorial Thursday in the Miami Herald:

It’s hard to blame consumers if their initial reaction to the proposed $48.5-billion merger of AT&T and DirecTV is to reach for their wallets and hold on tight. Mergers usually leave the public with fewer choices and lead to higher prices.

And lately, mergers are all the rage in the telecom world. The business of providing pay TV, Internet connections and phone service is coming down to a handful of industry giants.

The Comcast-Time Warner deal, worth $45 billion, was announced three months ago. In that agreement, which is awaiting government approval, both partners made much of the fact that each serves different geographical areas. Thus, they argued, a merger would not amount to decreased competition.

The proposed consolidation between AT&T, the No. 2 seller of high-speed Internet service, and DirecTV is a different deal. They compete head-to-head for TV viewers in 10 of the 20 largest metropolitan markets.

If the Comcast-Time Warner merger is approved and AT&T/DirecTV’s is not, that would leave one behemoth in the telecom world standing alone. If that merger is approved, then finding an equally robust competitor would only make sense. Green-lighting both, however, would provide an incentive for all the other players to get into the act.

The promised benefits have to be weighed against the obvious risk to consumers. Doing so, they may well conclude that it’s time to hit the pause button on merger mania.

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