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AT& T Completes BellSouth Takeover
It's not the old Ma Bell, but AT& T's purchase of BellSouth puts it back atop the heap of U.S. telecommunications companies.
(By Eric Gay -- Associated Press)
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Even as the new AT&T faces limited competition from other telephone operators, it is challenged by cable and computer companies playing in a far larger, more complicated marketplace encompassing television, broadband and wireless, as well as local and long-distance land-line telephone service. In recent years, cable companies have been more successful at poaching the phone business -- bundling it with TV and broadband and selling it to subscribers -- than traditional telephone operators have been in crossing over to television.
Earlier this month, a divided FCC approved a measure aimed at helping telephone companies move into cable television markets by significantly limiting what local officials can demand in return for franchises.
Gary Arlen, president of Arlen Communications, a Bethesda research firm, said AT&T's acquisition of BellSouth "reflects a natural oligopoly." In the early days, "public utilities were a natural monopoly. In our digital era today, competition is now not between the Bell companies, but between Bell and cable operators and some wireless [companies] in there."
Gigi B. Sohn, president of the Public Knowledge advocacy group, praised the FCC for approving the merger with strong conditions, especially on net neutrality, and urged the commission make sure that AT&T complies. In particular, she said the company might try to evade part of its net-neutrality commitment by claiming that the television service it provides over the Internet is akin to cable television and thus not subject to the condition.
Though the merger represents a landmark in U.S. telecommunications, it would be misleading to cast the corporate takeover as an epic tale of AT&T reconstituting itself from the wreckage of the 1984 breakup and its disastrous business decisions. The decline began with the divestiture, when AT&T gambled that it would be more lucrative to keep its long-distance business and cut loose the regional phone companies. But that meant jettisoning the huge number of employees and customers who gave the company political clout. In 1996, the regional companies and others won the right in Washington to compete for long-distance and the tide started turning against AT&T.
As intense competition forced prices for long-distance to fall, AT&T struggled to find a new calling and looked to cable. It again splintered six years ago, into four separately traded companies for broadband, wireless, business services and consumer services.
AT&T today is an utterly different corporation than the old Ma Bell, sharing little more than the name. The company that now flies the AT&T flag was until last year known as SBC Communications Inc. SBC, one of the original Baby Bells, gobbled up the relatively meager, sickly remains of the old AT&T, then took its venerated name before turning its appetite earlier this year to BellSouth.
Staff researcher Richard Drezen contributed to this report.
