Sunday, March 05, 2006

BellSouth to sell out to ATT?

The Wall Street Journal and the New York Times are reporting this morning that ATT is in the final stages of negotiations to acquire BellSouth.

The merger would have national implications:
A merger of two of the four remaining Bell phone companies would represent a huge step toward recreating the monopoly that existed in the phone business before the old AT&T was broken up in 1984.

A deal between AT&T and BellSouth could pressure Verizon to consider buying Qwest, the last of the four big Bell companies.
The resurrection of the old ATT was heralded by the recent acquisition of ATT by SBC; the new company took on the ATT name and presumably any ATT/BellSouth corporation would also do business as ATT.

For customers nationwide, the immediate consequence would be small. No customer would lose choices they now have--both ATT and BellSouth are monopolies in their areas and those areas don't overlap.

Mike has been predicting this merger for months and I'll be interested to see what he has to say about it. Our immediate interest is in the consequences for Lafayette and the LUS project. Don't hope for any real changes in the phone company's stance toward Lafayette or competition.

ATT, while SBC, was infamous for abusive public relations war in the TriCities of Illinois, pursuing a course there that inspired much of the aggressive defense Lafayette used in our local fight. You can expect ATT to continue to try and block communities that want to provide for themselves using the same federal, state, public relations, and legal resources as has BellSouth.

ATT and BellSouth are also pursuing very similar "Fiber to the Node" strategies toward getting into the crucial cable TV business. In contrast to Verizon (or LUS) which is running fiber to the home, ATT and BellSouth have pursued a strategy of building out fiber "deep" into field with the hope of beefing up their DSL lines and using those to provide enough bandwidth to fund a version of cable TV called "IPTV." "Internet Protocol TV" is basically a fancy term for downloading video; unlike their cable competitors, ATT/BellSouth customers won't have all the channels you watch constantly streaming through the connection to the home. Instead, a channel will have to be explicitly sent to the customer. This will mean a slight delay as you switch channels but will conserve bandwidth. ATT has been more willing to announce its video strategy publicly and has more test areas for its "Project Lightspeed" product.

In a lot of ways it looks like the acquisition of BellSouth by ATT will be a case of more of the same...but even more aggressively. The silver lining to this consolidation, such as it is, might be that the process of getting this by the feds might be distracting, that the new ATT will be straddled with monstrous debt, and that the sight of the giant phone company monopolies recombining could lead some of our federal and state representatives to question how wise it is to prohibit local competition.

It'll be well worth watch as all this unfolds. As always the devil will be in the details.

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