AT&T-BellSouth deal ripples across telecom industry

So what's the deal? The FTC and US Justice Department declare AT&T is too big and has to be broken up. Then SBC buys AT&T and starts buying up other Baby Bells and uses the AT&T name. Bell Atlantic partnered with Vodaphone to become Verizon, is that right?

Sooner or later we're going to be in the same boat we were when AT&T got broken up in the first place. How do these mergers keep getting government approval?

 

Ok, let's go back and review history a little bit:

First of all, today its not the same as it was in 1984. Back then, AT&T was a monopoly which upon breakup created seven companies: Ameritech Corporation, Bell Atlantic, BellSouth Corporation, NYNEX Corporation, Pacific Telesis Group, Southwestern Bell Corporation (SBC), and US West, inc.

Later on, SBC bought Ameritech and Pacific Telesis and recently bought its own parent AT&T. As you know, SBC chose to be renamed AT&T (or the new at&t).

On the other hand, Bell Atlantic bought NYNEX in 1996 and this "new" and larger Bell Atlantic merged with GTE to form Verizon Communications in 2000 and which last year acquired MCI.

All this leaves out BellSouth, which the new at&t is proposing to buy, and US West which is now known as Qwest and rumors that Verizon will go for it are all over.

What does Vodafone have to do with this? Well, it all started in 1999 when Bell Atlantic decided to create a wireless business with Vodafone Airtouch Plc. which was known as Bell Atlantic Mobile and was composed of Bell Atlantic Mobile, Airtouch Cellular, PrimeCo Personal Communications and Airtouch Paging. Also, when Bell Atlantic transformed into Verizon, the wireless business added GTE's wireless assets into the mix making the largest wireless carrier at the time, Verizon Wireless. As a result, Vodafone owns only 45% of Verizon Wireless, but Vodafone does not form any part of Verizon Communications.

Today, we have Verizon, Sprint and even the cable companies that will be competing with the new and larger BellSouth+AT&T for phone business, plus we still have Qwest hanging around and Voice over IP companies like Vonage that are taking some phone business. So again, this is not the same situation that started in 1972 and resulted in the breakup of Ma'Bell. There's still plenty of competition out there fueled by the birth of new technologies such as phone service over cable TV networks and others such as VoIP that did not exist back in the Ma' Bell era.

Here's a nice little diagram for reference:

 

Okay, the details are what I wanted to know. Thanks bobo, you're da man! I know it's not exactly the same situation but it does seem like they're approving some pretty big mergers lately.

Wish they would break up the cable monopoly Cox has around here...

 

Don't feel bad we have Charter here with no options except dish.

 

I really like that little diagram. Thanks!

 

All we have is Time Warner, DircTV, or Dish Network. We had Time Warner and man they really bite. They were always going off.. then they come up with these comercials that a dish will go out when it rains or something when the cable would go out on a bright sunny day... Couldn't be happier with DirecTV, we'll never go back to Time Warner.

 

Back In Iowa it went Hertiage CableVision then in 1992 TCI then 1999 AT&T Broadband then in 2000 to Mediacom.

I think Mediacom's stock says everything about the company.
Falling apart!!

Very few markets have a choice for cable providers. It is usally the just one company and that is it.

 

I always hear the reason why AT&T had to be broken up was because it was too big, that is somewhat right. It was due to anti competitiveness in Long Distance. The 20+ bell operating companies back in 1983 and before were not the main probably. It was due to GTE/Sprint and MCI and all the other companies that did long distance could not complete against AT&T due to how the bell system was setup. AT&T got cheaper rates than the competition. To make the market fair for long distance AT&T had to divest all ownership in all bell operating companies. AT&T knew the bell operating companies would not survive alone as 20+ companies so AT&T combined them into 7 Regional Bell Operating Companies (RBOC). 2 Bell Operating Companies had no ownership with AT&T so they stayed the same Cincinnati Bell and South New England Telephone (SNET).
SNET became apart of SBC in 1999 I think.

So the question will be is the addition of Bell South to AT&T going to make the company anti-competitive?

 

I think Corporate America is looking for a better share of Global Economics. Only Really BIG corporations can compete efficiently in a Global Market. SBC alone can not, Bellsouth alone can not. The FCC and Department of Justice are well aware of that. Expect more Billion $$$ deals and mergers, not only in communications companies, but in all kind of businesses.

 

It looks like that's the scenario we will be approaching if any other mergers are approved after AT&T/Bellsouth. The difference between now and 1984 is that today we have more than one national competitor. Sprint and Verizon have a large portfolio of assets. Their size is not that much smaller from what the new AT&T/Bellsouth will be.

 

I read somewhere that cable companies are allowed monopolies in the markets they serve because cable networks haven't aged as much as phone networks. The idea is that the regulators let cable companies recover the investment of wiring a whole city for X number of years before they are forced to allow competition (it's somewhere between 20 and 30 years I think). I don't know anywhere in the US where there is more than one cable company per city. Once those cable networks mature, then you'll start to see Cablevision and Comcast competing in the same territory as the feds will force them to share the existing lines to promote competition.

 

I saw this cartoon and just had to post it here......

 

As a "once" customer of Mediacom, I can say I hope they do fall apart!

 

Well technically it's her other son that's disguised as the mother who's trying to marry his brother. LOL.

 

Lucent, Alcatel in merger talks
MURRAY HILL, N.J. (AP) — Lucent Technologies (LU) and French telecom equipment maker Alcatel SA are discussing a business merger in what could be the start of consolidation among the companies that help power telephone and Internet networks.
The companies issued a joint statement late Thursday confirming the talks.

"We can confirm that Lucent and Alcatel are engaged in discussions about a potential merger of equals that is intended to be priced at market. There can be no assurances that any agreement will be reached or that a transaction will be consummated. We will have no further comment until an agreement is reached or the discussions are terminated."

A combination with Lucent would allow Paris-based Alcatel to expand its presence in the U.S. market and could trigger a new wave of consolidation among companies that make equipment for phone companies.

The companies have considered getting together before. In the spring of 2001, they were on the verge of a $23 billion merger, but the talks fell apart in a disagreement over how much control Alcatel would have.

News of the talks was reported online Thursday by The New York Times and The Wall Street Journal.

The Times, citing people close to the talks, reported that Alcatel was negotiating to acquire Lucent for about $12.6 billion. The Journal valued the "merger of equals" at $33 billion, quoting unnamed people familiar with the matter.

Consolidation among U.S. regional phone companies, including the proposed $67 billion acquisition of BellSouth Corp. by AT&T Inc., has created new pressure on equipment suppliers to combine operations.

Lucent's leadership in wireless technology, used by such major carriers as Sprint Nextel and Verizon Wireless, would complement Alcatel's leadership in DSL, or digital subscriber line, equipment used by phone companies that are growing their broadband business, the newspaper said.

For Lucent, a combination with Alcatel could represent a fresh start for a company that has gone through a remarkable boom-and-bust cycle in its 10-year history.

The giant telecommunications equipment company was spun off from AT&T Corp. in 1996, instantly becoming one of the hottest stocks on Wall Street.

After a rapid rise as it bought up a few dozen smaller companies, Lucent became a Wall Street favorite, with its stock hitting a peak of $84 per share in December 1999. But the following year, the company began missing earnings targets and then had to restate previously released earnings figures as sales across the telecommunications industry dropped with the dot-com collapse.

By 2002, the stock had crumbled to a low of 58 cents. Lucent also was hurt by missing key market trends and financing lots of sales of its equipment to small companies that didn't pay it back.

The company was on the brink of collapse, but survived by cutting thousands of jobs and billions in debt.

Patricia Russo, one of Lucent's founding executives, was named president and chief executive in 2002 and engineered a turnaround plan that has slowly improved the company's performance.

Lucent shares closed unchanged at $2.82 Thursday on the New York Stock Exchange.

Alcatel, too, has been gradually recovering from the telecom downturn. Like Lucent, it has shed jobs and streamlined operations since 2001. The company had sales of nearly $16 billion in 2005, with about half of that in Europe.

The world's largest provider of broadband Internet equipment, Alcatel aims to capitalize on demand for so-called triple-play services — telephone, Internet and TV — in the United States and Europe and to capture more mobile phone contracts in emerging markets.