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October 28, 2005

It's all in a name

Steve Rosenbush

Now that the Justice Department has approved SBC's purchase of AT&T, SBC has taken the name of its newly acquired (and former corporate parent) AT&T. The new AT&T was inevitable. (We wrote about this coming change more than a month ago. Link.)

Is SBC putting the old Bell System back together? No. The times are different. The Web and wireless phone service weren't available when the Justice Department ordered breakup of AT&T in 1983. The residential and business telecom markets were near monopolies, a little competition from the likes of MCI notwithstanding. But the reintegration of SBC and AT&T and the integration of Verizon and MCI reaffirm the telecom market's need for scale and scope. The decision to adopt the AT&T name is a reminder of how things work.

And my guess is that it won't be long before we see more parts of the old Bell System reintegrated. Best bet: SBC won't waste any time trying to acquire BellSouth. That would eliminate conflicts between SBC and BellSouth, which are joint owners of wireless giant Cingular. Now that SBC owns AT&T, it will be competing with its partner for big corporate accounts like Coca Cola, which is based in BellSouth territory. With little resistance in Washington in sight, the only significant obstacle would be a possible counter offer from Verizon.

Neither company is likely to acquire US West whole. But a few markets such as Seattle and Denver might be of interest, especially to SBC. And the remaining rural markets in US West territory could be ripe for acquisition by private equity players or a big independent telecom company.

11:45 AM

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I can't imagine why you are calling a company U.S. West. U.S. West was purchased by Qwest a few years back so it's just known as Qwest.

SBC is making a very smart move to change it's name to AT&T. When I lived in the Midwest I dealt a lot with Southwestern Hell, as it was then known. SW Bell bought out Ameritech (who I then had a cell phone with) and proceeded to shut down the Ameritech cell phone service which had better coverage and was cheaper at the time that SWBell. Land-liners were complaining about bad service from Ameritech after the deal went through. I also went through hell a couple years later with SBC trying to get a DSL line installed.

SWBell then bought PacBell and decided to rename the corporate enterprise to SBC (Southwestern Bell Corporation).

SBC changing to AT&T is a great move. Many people know what kind of poor service SBC offered to millions of people. SBC is well known for sky-high POTS (plain-old telephone service) rates, horrible customer service, and snake-like tactics to avoid regulators. With a new name maybe people will have a short enough attention span to forget about the past abuses of SBC.

SBC divided up a lot of towns that had single area-codes into multiple codes (314 became 314 & 636). Then SBC proceeded to charge a "connection fee" to call a place that I used to be able to call for free. In addition to 10-digit dialing, I was not able to call my work (4 miles away) from MY OWN HOME without paying 25 cents a call OR subscribing to the "metro-area plan" for an additional $15 a month. A year before I was able to call WORK from HOME for the regular price of POTS.

Regarding the purchase of Bell South, I highly doubt that will happen, solely because there is a limit to the appetite of regulators to give small town America to a corporate entity. Many southern towns do not yet have enough high-speed internet to make VoIP a realistic alternative to the Bellco.

I've dealt a lot with Verizon and I appreciate them a lot. There is a stark contrast between SBC and Verizon. Verizon believes in investing in leading edge services and technology (fiber cable FIOS system) where SBC is once again trying to win it through cheap, half-assed copper-based cable systems.

If I go the rest of my life without ever buying a product from SBC or the new AT&T I'll be happy.

Posted by: Wes at November 8, 2005 03:12 PM

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