How the merger will affect Marylanders

April 23, 1996|By Michael Dresser

Questions and answers about the Bell Atlantic-Nynex merger:

What will this mean for Maryland telephone users?

In the short term, very little.

The merger is likely to have a negligible impact on local telephone rates, which are controlled by state regulators. It doesn't seem likely that the Maryland Public Service Commission would let Bell Atlantic pass along any costs of the merger. If anything, regulators might feel some of the claimed efficiencies of the merger should be shared with ratepayers.

Whether the merger will have a positive or a negative effect on long-distance rates is a matter of debate. Nynex and Bell Atlantic say rates will fall, but consumer advocates contend rates will increase as marketing costs skyrocket.

Is my Bell Atlantic stock worth more today than it was last week? How about my Nynex stock?

Each share of your old Bell Atlantic stock will be replaced with 1.302 shares of stock in the merged company. According to the market, each of the old shares was worth $67.125 at the close of trading yesterday, more valuable than it was Friday by $2.125. Nynex stock, which will be exchanged on a one-for-one basis, fell $2.75, to $50.25.

Will there be any Bell Atlantic jobs lost in Maryland?

The two companies estimate that between them about 3,000 overlapping managerial jobs will be eliminated as a result of the merger but that union jobs will be safe. The companies said the combined companies would "redeploy" displaced managers.

It is impossible to say how many Maryland jobs might be lost.

One operation that could be at risk is the network engineering business that moved to Baltimore last year. Nynex has a comparable operation, and the new Bell Atlantic could decide to consolidate the units in a more central location.

After the announcement, what's next in the process? How long will it take?

The merger will have to pass muster with the Justice Department and the Federal Communications Commission, as well as regulatory commissions in the Bell Atlantic and Nynex states, plus the District of Columbia.

Consumer groups said yesterday that they will oppose the merger, but it appears unlikely that they will be able to derail it. Long-distance companies indicated that they will press regulators not to approve the merger unless the local companies reduce the access charges they collect for completing long-distance calls.

Nynex and Bell Atlantic estimated it would take about a year to close the deal. That's probably realistic, unless the matter ends up in court.

Bell Atlantic and Nynex had already combined their cellular divisions. Can we tell anything about the new Bell Atlantic from how that merger has worked out?

The track record of the Bell Atlantic Nynex Mobile joint venture is one of the most encouraging signs that the merger might work. Sales and earnings have been very good.

It seems like yesterday that Ma Bell was broken up. What happened?

The Baby Bells grew up and no longer were content to stay in the regional playpens U.S. District Judge Harold Greene set up for them in 1984. They wanted the freedom to compete in long-distance, cable TV and other markets.

But Judge Greene liked them right where they were. So after years of struggle, they prevailed upon Congress to pass a law in February that effectively fired the judge as Bell baby sitter.

But there was a quid pro quo. To get permission to enter the long-distance and cable markets, the Bells had to agree to open their local telephone monopolies to competition from the likes of AT&T and MCI.

Now it's one thing to talk about competing with these heavyweights and another thing to do it all by yourself. So some of the Bells began to think they'd be in a better position to compete if they were bigger.

So now there are five of the original seven "Baby Bells" left. How many will there be next year? In five years?

"The Bell system is coming back together again," says A. Michael Noll, a professor of communication at the University of Southern California. "If you were sitting on Mars, you'd be absolutely amazed."

Whether Mr. Noll is correct or not is hard to say. Certainly the same logic that says two Baby Bells can stand up to AT&T better than one argues that seven could do so even better.

Whether the Justice Department's Antitrust Division will see it that way is questionable. Chances are, each of the Bells will get one merger, leaving three or four companies. Further mergers are more likely to draw a challenge, but that could depend on the antitrust philosophy of the administration in power.

Mr. Noll, an unreconstructed defender of the old Bell System, is hopeful. "Maybe it'll be decided that putting together the monopoly again is in the national interest."

Pub Date: 4/23/96

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