Fcc And Mergers Essay, Research Paper

The Communications Act of 1934 established the Federal Communications Commission (FCC). Its main purpose back then was to control and regulate all means of communication, from radio, television, wire, satellite, and cable. It is governed by five commissioners, and reports to Congress. There are seven bureaus that operate under the FCC s umbrella. They include the Cable Services Bureau, the Common Carrier Bureau, the Consumer Information Bureau, the Enforcement Bureau, the International Bureau, the Mass Media Bureau, and the Wireless Telecommunications Bureau. These bureaus are responsible for developing and implementing regulatory programs, processing applications for licenses or other filings, analyzing complaints, conducting investigations, and taking part in FCC hearings.

The Telecommunications Act of 1996 has given much more control and jurisdiction to the FCC in regards to newer and newer technologies. Wireless data transfers were not an issue in 1934. But they are now. The FCC regulates not only the new technologies, but also the POTS (Plain Old Telephone Service) lines, as well as cable service, television, satellite transmissions, etc. If there is a means to communicate something, chances are that the FCC will be watching.

Of utmost importance in the Act of 1996 was what it did as far as opening up new arenas in which to expand. It allowed the Bell Operating Companies to begin offering long distance service, allowed cable TV companies to expand into the telecommunications arena, let telecommunications firms begin providing video and cable programming, gave permission to free long distance providers to offer local service, and forced Internet Service Providers to restrict access to indecent material. This was a paramount decision, as it now opened so many new arenas for companies to expand into.

As well as expansion, it also gave the FCC much more to keep an eye on, especially when many firms decided they could not expand where they wanted without the money and resources of another firm. Hence, mergers became very popular and the FCC became more and more involved where the Justice Department would have normally made most decisions.

One of the seven bureaus of the FCC is the Wireless Telecommunications bureau. The main function of this bureau is fairly clear. This bureau has been extremely busy in the last few years, as they not only regulate the businesses but also decide whether or not a merger will benefit consumers or the business. Mergers have become the latest fad in the Telecomm industry, as companies begin to pool resources together to gain more and more of the market share.

These companies argue that without a merger they will not be able to explore and expand upon future opportunities. Opportunities that will, they argue, allow for expansion into new markets that will allow them to eventually lower prices and offer new services to future and existing customers.

As the FCC looks into the arguments put forth by these companies, they must keep in mind that their main objective is to keep the best interests of the general public at the forefront of their conclusion. These interests include, but are not limited to, the price of a utility, the availability, and the timeframe at which a newer service could be provided. Competition remains at the forefront of the FCC s decision, as this SHOULD force the companies to regulate themselves, so to speak as the whole principle behind competition is that prices will sort themselves out and the consumers will benefit, as well as whomever provides the best service.

Obviously, stockholders are pushing for mergers, as they should allow for higher profits through increased market share and competition. The main argument put forth by the companies is that with more resources, both capital and technology, it would allow them to enter new markets and bring with them competition to a monopolistic environment.

A question on the minds of some of the commissioners is why a multi-billion dollar company needs more resources than it already has to compete and expand to new territories. As Gloria Tristani, a commissioner with the FCC, said, In all candor, I m a little skeptical of the notion that a $25 billion company needs to be bigger before it can successfully compete out-of-region. (FCC Mulls Mergers, p.2) Answers to this and similar questions range from resources to people. In response to the SBC Communications and Ameritech merger, Stephen Carter, SBC s president of strategic markets, said that on their own they could only serve larger businesses with a few services, but that to contend on a national level that would open opportunities to both business and residential level, they would need 8000 people and $3 billion.

It is not only the money that will help expansion into new arenas, but also the resources that the individual companies already have. It would be much easier to begin development on a new project if the people were already in place and working together. Couple that with the existing technologies of an established company and merging only makes sense.