Tuesday, October 05, 2004

Cell-Phone Battles Taking Investment Toll

There has been a fair amount of business news recently expressing doubt about Cingular's ability to easily absorb AT&T Wireless. According to a brief on Techweb, Standard and Poor downgraded Cingular, SBC, and AT&T wireless' credit rating.
"The cell-phone wars are taking their toll on BellSouth Corp. and SBC Communications, as well as on their jointly backed Cingular Wireless cell-phone service provider, as Standard & Poor's Ratings Services lowered its ratings on the three companies. Cingular has been struggling to integrate AT&T Wireless into its system."
This will increase BellSouth's costs and make it less likely that they can upgrade their core infrastructure. The investment shift to wireless may be a good idea for the company. (Or may not--it is pretty clear that recently shed wireless investments in Latin America were never a good idea) What is clear is that they are milking the cash cow that they have to invest in wireless and that this isn't necessarily in the best interest of those customers that provided the dollars. We'd most likel prefer that they upgrade the systems we are using.

One nice thing about a municipal utility is that the money that comes from its owner/customers will remain in the region and will be used for system upgrades or to support local community services.

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