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News Release
February 7, 2002
CONTACT: David Fish
(202) 289-8928

Echostar-DirecTV Merger Will Benefit Consumers
Eisenach Urges FCC to Focus on Market Dynamism

WASHINGTON, D.C. - Saying that the potential benefits to consumers far outweigh the costs, Progress & Freedom Foundation President Jeffrey Eisenach is urging the Federal Communications Commission to give its blessing to the proposed merger between Echostar and DirecTV, two satellite service providers.

In comments filed with the FCC this week, Eisenach cites potential efficiencies resulting from the merger, including better use of spectrum and the ability of the combined firm to serve more markets. But he urges the Commission to pay particular attention to “the potential efficiency and pro-competitive effects of the proposed merger in the market for broadband internet services” currently served by cable and telephone companies. Moreover, he maintains that the dynamism of the market for digital information services makes the exercise of market power by the new company highly improbable.

“Satellite-delivered broadband Internet services represent the most likely near-term prospect of providing the ‘third pipe’ to homes and small businesses, and there is every reason to believe that the merged firms will have an enhanced ability and incentive to fulfill this promise, thereby contributing further to an already intense rivalry and reducing the probability that market power will develop in these markets,” he said. “Equally important, the merged firms will have a stronger capability to provide broadband services to rural and other underserved communities….”

Eisenach’s comments draw on those he submitted with PFF Director of Communications Policy Studies Randolph May last month urging the FCC to adopt the least restrictive regulatory alternatives possible as it sets new ownership rules for multi-system cable television operators. In those comments, Eisenach and May concluded the Commission “must recognize that horizontal and vertical combinations…have an important role to play in enabling firms to achieve the economies of scale and scope necessary to build out and provide video and other services over competing platforms, whether they be cable, satellite, wireline, 3G wireless or whatever.”

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation