Monday, January 31, 2005
Baby Bell eats Ma Bell
One of the more significant events in telecom history occurred today when SBC announced its decision to buy AT&T, the venerable telecoms giant that had been around since the invention of the telephone and founding of the company by Graham Bell, for $16 billion. This was probably inevitable as AT&T atrophied bit by bit after the 1984 court ruling. First the Baby Bells were spun off. More recently, the wireless business was bought by Cingular (majority owned by SBC), and now Ma Bell is no more. Baby plus Ma will probably become the largest telecommunications firm in the United States.
AT&T tried to change, as it entered fields such as cable television and wireless phone service itself. But its efforts generally met with business disappointment, and it soon left both those fields. In April 2004, AT&T was dropped from the Dow Jones industrial average, signifying its lessening importance to the nation's economy. It was replaced by another so-called "Baby Bell," Verizon Communications. AT&T announced last July it was basically pulling out of the consumer long distance business that had been a core of its business since the court-ordered split-up of AT&T in 1984, and it took a $11.4 billion charge reflecting the reduced value of those assets in the third quarter last year. By the end of 2004, it had dropped to 24 million consumer customers, down more than 30 percent over the previous 12 months. The business long distance service has been waning as well.
Om Malik seems to think this merger may affect the roll out of WiMAX.
First it was the Sprint+Nextel merger that put the WiMAX ready spectrum out of reach, and now we have a situation where one of the most ardent supporters of the technology in the carrier space going straight into the arms of a company which owns a 3G/Wireless network - SBC. I wonder what happens to the AT&T+Intel deal to develop communications chips? A few months ago which conducting a panel for the folks over at the MIT Alumni Association, I sat with some AT&T execs who told me that they were going to seriously contemplate WiMAX because it cuts down their access charges. Well that won’t be much of a problem in a large part of the country. I have a feeling that WiMAX is going to be reduced to the role it was predestined for - backhaul in areas where fiber is too expensive to sink, at least for now.
AT&T tried to change, as it entered fields such as cable television and wireless phone service itself. But its efforts generally met with business disappointment, and it soon left both those fields. In April 2004, AT&T was dropped from the Dow Jones industrial average, signifying its lessening importance to the nation's economy. It was replaced by another so-called "Baby Bell," Verizon Communications. AT&T announced last July it was basically pulling out of the consumer long distance business that had been a core of its business since the court-ordered split-up of AT&T in 1984, and it took a $11.4 billion charge reflecting the reduced value of those assets in the third quarter last year. By the end of 2004, it had dropped to 24 million consumer customers, down more than 30 percent over the previous 12 months. The business long distance service has been waning as well.
Om Malik seems to think this merger may affect the roll out of WiMAX.
First it was the Sprint+Nextel merger that put the WiMAX ready spectrum out of reach, and now we have a situation where one of the most ardent supporters of the technology in the carrier space going straight into the arms of a company which owns a 3G/Wireless network - SBC. I wonder what happens to the AT&T+Intel deal to develop communications chips? A few months ago which conducting a panel for the folks over at the MIT Alumni Association, I sat with some AT&T execs who told me that they were going to seriously contemplate WiMAX because it cuts down their access charges. Well that won’t be much of a problem in a large part of the country. I have a feeling that WiMAX is going to be reduced to the role it was predestined for - backhaul in areas where fiber is too expensive to sink, at least for now.
