SBC Might Buy AT&T

ChipGuy writes "SBC is in talks to buy AT&T according to Wall Street Journal and New York Times, both reporting price tag to be between $15-and-$16 billion. The news comes close on heels of SBC reported weaker earnings and 7000 job cuts. The New York Times says talks are fluid and sensitive. Wall Street Journal says, "a major acquisition would speak to SBC Chief Executive Edward Whitacre Jr.'s aim of turning the company into a national brand and his desire to do at least one final deal before he retires." Om Malik writes that "buying AT&T will make sense for anyone, and not just SBC. Why? Because AT&T still is the only game in the enterprise markets. MCI is hurting and Sprint clearly wants to focus on wireless. That leaves AT&T in a pretty good shape.""

Comments

Perspective

[Octagon Most]

Before we get into it about rebuilding the hated Ma Bell of yesteryear, keep this in perspective. SBC is right now one of the four remaining RBOCs, or Baby Bells, formed from the divestiture of AT&T (the original national phone monopoly) in 1984. The RBOCs already provide national long distance service (opened to them following the Telecommunications Act of 1996). AT&T is mostly a pure long distance and data network (WAN) player these days. The Bells have to have network-sharing agreements to provide national LD service. Qwest has an extensive fiber LD network though. So this potential acquisition would add a national long distance and data network to an incumbent local service provider and give it a huge presence in the enterprise market. It would not create a new national phone monopoly or be the Son of Ma Bell. They would be a formidable competitor though.

Need 1 More Purchase: Lucent (& Bell Labs)

[reporter]

I am not one to wax nostalgic for technology companies, but I feel that, in the interest of national security, SBC's CEO (Edward Whitacre, Jr.) should do 1 more purchase after AT&T. SBC should buy Lucent, which includes its famed Bell labs that produced more nobel prizes than any other industrial lab. Unfortunately, Lucent cannot really financially support Bell labs and has floated the idea of transferring it to the research triangle in North Carolina, consisting of Duke University, UC-Raleigh, and one other university. As well, I would not want Bell Labs to fall into the hands of, say, Ecoma Enterprises; Ecoma is a Taiwanese company that Washington has penalized (according to page 133 of "The Federal Register" for 2005 January) for assisting Iran in building better missiles with nuclear capability.

Anyhow, the telecommunications industry has changed dramatically since the breakup of AT&T, and the rationale for the breakup no longer exists. These days, cell phones are prevalent; competitors easily enter the market for cell phones, which can be used for local and long-distance calls. A re-united AT&T (SBC + Pacbell, which was purchases by SBC, + AT&T + Lucent, which includes Bell Labs) would not pose a monopolistic threat. Heck, a re-united AT&T would be no more monopolistic than Micro$oft.

Note that even the Internet poses additional competition in the telecommunication market. Many people use the Internet, via VOIP, to make telephone calls although they may not realize that their call is being routed via IP packets.