MEMORANDUM

October 19, 1993


TO:       Honorable Anne K. Bingaman
          Assistant Attorney General for Antitrust
          U.S. Department of Justice
          Washington, D.C. 20530

FROM:     Ralph Nader

     Nicholas Johnson
     Former Commissioner, Federal Communications Commission
     Former Commissioner,  Iowa City, Iowa, Broadband and          
               Telecommunications Commission
     Chair, National Citizens Communications Lobby

          James Love
          Director of Economic Studies
          Center for Responsive Law

          Jeffrey Chester
          Center for Media Education

          Johnathan Motl
          Consumer Lawyer

SUBJECT:  Bell Atlantic - Tele-Comunications, Inc. Merger

     We are writing to urge the Antitrust Division to oppose the proposed merger
between Bell Atlantic and Tele-Communications, Inc. (TCI), as well as other
announced telephone/cable industry mergers.  Our concern is that such mergers
will reduce competition in markets for information services.

     The Congress and the Executive branch have rightly expressed a desire to
promote competition in telecommunications markets, but too often this
discussion has failed to address the most important competitive issue, which is
the market for information "content," as opposed to information "conduit"
services.

   Competition in content markets should be a paramount concern of policy
makers, since our society depends on a diversity of expression and the freest
exchange of ideas.

     Currently the cable television industry is allowed to own both the "content"
and the "conduit" for cable television services.  The predictable result has been
attempts by the large cable companies, particularly Time-Warner and TCI, to
leverage their monopolistic control over local franchise services (the conduit) to
obtain monopolistic control over cable programming channels (the content).  As
you know, the cable industry is not regulated as a common carrier, and the two
large franchise owners, TCI and Time-Warner, can clearly make or break a
programming service.  News reports on this topic are so abundant that this point
seems completely obvious.  Consider, for example, the widely reported fact that
General Electric was not allowed to offer CNBC as a news format channel,
since TCI and Time-Warner are large shareholders in Turner Broadcasting,
which owns CNN. Likewise, CBS recently complained that its efforts to obtain
a news channel in return for carriage of its broadcast signal was blocked by the
large cable operators.  If GE or CBS can be kept out of a market by TCI or
Time-Warner, what can a much smaller independent firm hope for?

     The two recent private antitrust actions by Viacom against Time-Warner and
TCI provide additional illustrations of the specific types of anti-competitive
practices that result from vertical integration in the cable market.  Viacom
claims, for example, that as the nation's largest owner of local cable franchises,
TCI "refused to carry (Viacom) programming," and "extracted onerous terms as
a condition of carriage," while they "unfairly favored their own programming
services."  According to Viacom, "without access to Malone's cable systems,
cable network programmers cannot achieve the `critical mass` of viewers needed
to attract national advertising or a sufficient number of subscribers required to
make the network viable."  Viacom claims that TCI said it would "crucify"
Viacom's Showtime and Movie Channel services if Viacom did not agree to
"extortionate concessions," and that TCI had withheld an affiliation for Viacom's
SNI programming in order to force Viacom to merge SNI into TCI's Encore
Media, on terms favorable to TCI, or to eliminate or weaken SNI as a
competitor to TCI's Encore Media.

     Given TCI's track record of anticompetitive abuses, it is alarming that they
are proposing to merge with Bell Atlantic, providing the new merged entity with
even greater power.  As you know, Bell Atlantic is proposing to offer Video
Dial Tone services, under FCC rules that will allow Bell Atlantic to own video
programming services.  In the absence of more effective common carrier
protection, the larger combine market power of TCI and Bell Atlantic will
adversely affect independent providers of information, and lead to less
competition and less diversity in information services markets, harming
consumers.  We urge you to oppose the Bell Atlantic TCI merger.

     Thank you for your attention to this matter.

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