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Phone Merger Dials Opposition

Consumer groups and long-distance companies want federal regulators to block Bell Atlantic's proposed takeover of GTE, saying it would blunt competition and lessen prospects for lower prices.

Opponents of the merger say it would create such a formidable force, controlling one-third of the nation's phone lines, that other phone companies would not want to compete against it, particularly for less lucrative residential phone customers.

The Federal Communications Commission and the Justice Department are reviewing the $52 billion merger to determine whether it would be good for consumers and for competition. Monday was the first deadline for all interested parties to weigh in on the deal at the FCC.

Bell Atlantic and GTE say the merger would be good on both counts. They say the combined company will have efficiencies and the financial muscle to provide phone and other services to markets the companies separately do not serve.

The merger, announced in July, would create the nation's second-largest telephone company, promising an array of advanced voice, data, and Internet services to millions of Americans.

The combined company would control 63 million local lines in 38 states. Only AT&T, once it completes its planned acquisitions, would be bigger.

The Consumers Union, the Consumer Federation of America, Sprint Corp., MCI WorldCom, and AT&T want the FCC to block the deal outright, saying there are no conditions that regulators could impose on the merger that would satisfy them.

"It would be impossible to get competitors to enter the combined companies' markets and drive down residential phone rates," said Gene Kimmelman, co-director of the Consumers Union's Washington office.

Sprint and WorldCom contend the merger would eliminate GTE as a competitor to Bell Atlantic. GTE now offers phone service in Pennsylvania and Virginia, part of Bell Atlantic's local phone region.

WorldCom and Sprint also argue that if the merger is approved, the FCC should not let GTE continue providing long-distance service inside the merged companies' 38-state territory.

The merged company, they said, would first need to open its local phone market to competition, as required by a 1996 telecommunications law, before being allowed to offer long-distance service to local phone customers. The law's provisions governing long-distance entry apply only to the Bells, not to GTE.

Written By Jeannine Aversa

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