Nynex takeover won't get Md. review PSC declines to delve into Bell Atlantic deal


The state Public Service Commission yesterday declined to review the takeover of Nynex Corp. by Bell Atlantic Corp., turning aside arguments by competitors and the state People's Counsel that consumers need a closer look at the deal's effect on costs and competition.

Bell Atlantic, long the state's nearly exclusive provider of local telephone service, argued that the state commission did not have jurisdiction over the deal. The commission's staff didn't agree, but said no state review was needed because there was no evidence that consumers will be hurt by the proposed merger.

"To analyze the impact of that sort of event is pretty speculative," said Steve Molnar, director of telecommunications for the commission's staff. "Bell Atlantic has made any number of acquisitions through the years and we have not found that those activities have hurt Bell Atlantic of Maryland."

People's Counsel Michael J. Travieso said the commission should have investigated how the merger will affect service quality to Marylanders and whether it will create any savings that could be passed along to consumers in the form of lower rates.

But Bell Atlantic-Maryland President Daniel J. Whelan called those concerns irrelevant. The commission is expected soon to issue a landmark order changing the way the state regulates phone companies, which he said will move regulators away from dictating price changes to match fluctuations in the cost of providing phone service. That change makes it unnecessary for the state to probe whether the merger will cut Bell Atlantic's costs, he said.

Instead, the new system will cap prices for local phone service and let companies like Bell Atlantic keep any cost savings, which are expected to be dramatic over time because engineering advances are cutting communication costs across-the-board.

However, the advent of competition for local phone service customers from companies such as AT&T; Corp., MCI Communications Corp. and others is likely to force Bell Atlantic and other carriers to pass at least some of their savings back to phone users.

Whelan said the deal awaits antitrust review from the U.S. Justice Department, but is not expected to face major obstacles from officials in states traditionally served by Bell Atlantic.

Travieso said the cost review was needed because the new price caps will be based on the cost of providing phone service before the rules take effect. To set caps without reviewing the finances of the merged company bases the new rates on outdated information, he said.

"These are unresolved issues the commission should have looked at," he said.

Pub Date: 8/22/96

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