Two Groups Oppose Cell Firms’ Merger

Two top U.S. consumer groups Tuesday urged communications regulators to block Cingular Wireless’ proposed purchase of AT&T; Wireless Services Inc., citing concerns that it would lead to higher prices and poor service.

Cingular, a joint venture of local phone companies SBC Communications Inc. and BellSouth Corp., has agreed to buy its smaller rival for $41 billion in cash to create the largest U.S. wireless company, leapfrogging ahead of Verizon Wireless.

Consumers Union and the Consumer Federation of America petitioned the Federal Communications Commission to prevent the combination on the grounds that it would cut competition and consolidate too much valuable spectrum in a single company.

“The improvements that they promise will result from the merger come at too high a price,” the groups said.

Analysts have said the two companies would probably face few hurdles in winning approval from the FCC and from antitrust authorities at the Justice Department. Both agencies must sign off on the deal.

The companies might have to divest a few million customers in some markets, analysts have said. But the companies have agreed that any divestments would not exceed $8.25 billion in assets.

Competition for wireless customers has been fierce in recent years, with carriers offering less expensive pricing plans and launching high-speed Internet services.

Still, the consumer groups argued that subscribers would have fewer choices if the merger were allowed to proceed, allowing Cingular to raise prices. They also said the company would hold a dominant position in the market for wireless data services.

Clay Owen, a spokesman for Cingular, said the company had not yet received a copy of the petition but defended the acquisition on the grounds that the combined company would be able to improve call quality and coverage areas, among other things.

“We believe that Cingular’s acquisition of AT&T; Wireless is in the public interest,” he said.