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ACA criticizes EchoStar-DirecTV merger, again

Thu, 06/13/2002 - 8:00pm
Susan Rush

The American Cable Association is continuing its fight to defeat the proposed EchoStar Communications-DirecTV merger. In a letter to the FCC, the faction claims EchoStar's notion that DBS is at a competitive disadvantage to cable systems is hogwash.

The ACA is trying to rebuff statements made by EchoStar and DirecTV recently to the FCC that the merger would help level the playing field in the cable vs. satellite race. The organization, however, believes that the merger would effectively weaken or eliminate smaller cable firms from the competition. "Competition would be eliminated and hundreds of small, local communications businesses could be destroyed," the ACA said in a letter to the FCC.

This is not the first time the ACA, which represents nearly 1,000 smaller, independent cable businesses serving roughly 7.5 million subscribers, has come out against the merger. In February, the organization said the merger would "create a giant, entrenched satellite monopoly," and would reduce or eliminate competition, deployments, diversity and small communications businesses in the smaller markets. The ACA also questioned EchoStar's math regarding subscribers, saying "The average ACA member company serves 8,000 subscribers, more than 16,292,000 fewer subscribers than the post-merger EchoStar would serve. EchoStar cannot seriously maintain that it needs a DBS monopoly to compete against small market cable companies."

The EchoStar-DirecTV camp has said it welcomes open debate on the merits of its merger. The companies stand by their claim that the merger would heighten competition.

In October, Hughes' parent General Motors officially accepted EchoStar's $25.8 billion offer for the unit. The merger is designed to combine the No. 1 and No. 2 satellite providers — both of which are offering high-speed Internet access via two-way satellite — to create a powerhouse that could effectively compete with cable and increase broadband options for rural Americans, according to EchoStar. EchoStar submitted its merger application for review to the FCC in early December.

In May, the ACA came out in favor of the AT&T Broadband-Comcast merger.

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