North American Network Operators Group

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Re: Welcome back, Ma Bell

  • From: Christian Kuhtz
  • Date: Mon Mar 06 10:21:14 2006

On Mar 5, 2006, at 8:05 PM, Eric A. Hall wrote:

On 3/5/2006 7:10 PM, Steve Sobol wrote:
Eric A. Hall wrote:

What are people worried about here exactly?
The same lack of competition in telecommunications that we had in the 1980s?
Well that's an overreach. And if the primary concern is consolidation then
we should have blocked NYNEX and Bell Atlantic from merging back in 1997,
since this deal is basically SBC + BellSouth/Cingular, which is mostly
indistinguishable from the earlier one.
Sort of. No offense to Qwest folk, but we're basically down to a duopoly, which really isn't that improved over a single corporation. It will be interesting to see just how much the bells will compete with each other. Traditionally they haven't. They would have enjoyed large regulatory freedoms had they left their own territory and gone into each others territories, but they generally didn't. Insert your favorite excuse/fig leaf for why they haven't in the past one or two decades (depending on which regulatory construct you favor).

If going forward, VZ & ATT do not engage each other, instead of aggressively competing on each others home turf (outside of wireless which), maybe we'll benefit as 3rd parties. Maybe the DOJ will take notice. If not, then you end up with two organizations controlling their respective markets and we all lose. Two because it seems nobody really takes Qwest seriously out of the big three, or now soon to be two.

That being said, the 'new ATT' with all those assets will need to be integrated, and work efficiently. Turf battles will ensue. Tens of thousands will get laid off. This really has a good ways to go before things settle out. If Atlanta turns into ATT's version of BellSouth's Birmingham, Atlanta isn't going to be a very fun place to be for that crowd. Which will have ramifications at a much larger scale, far outside telecom.

And, yes, we perhaps should've blocked the NYNEX/BA merger in 1997. I think the underlying problem here is with the entire telecom industry caught up in merger mania for the past decade or so, nobody had a clear idea of what they wanted to see when it was all done. Or just how far done was. So, this is much like the pot on the stove, where we as the public/regulators/etc are the frog in the cold water (blissful early 80's) and we can't quite make out when it's time to jump out.

I think people are reacting to the brand, the AT&T ghost really, since
there's none of it left.
I don't know if I share that view entirely, knowing how much the AT&T brand identity is revered inside (especially inside the baby boomer generation). Think of the scene from Toy Story "ooooh, the claaaaw". That gets sort of close to some of my experiences.

Whether they can convert I think definitely will be a challenge. We really can't do much more than sit and watch as individuals, and as companies we have to step up our game. If nothing else, this should dump a good number of good people into the now available talent pool, too.

But, again, it doesn't take a rocket scientist to figure out that the integration nightmares these companies will have will open opportunities for smaller, more nimble players. Ultimately, I think Qwest will just wither away and the assets will be sold off in bidding war, post bankruptcy protection. Or maybe it'll be maintained as the fig leaf. Who knows. I'm not sure it matters. In this game, they're the size of Alltel compared with individual RBOCs, and not really much of a factor.

Then again, this deal isn't done, VZ might counter bid, divestitures may be required, and regulatory review needs to be conducted, and a number of lawsuits dealt with. So, it'll be a while. But, ah, what a great way to start the morning. ;-)

Best regards,