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New AT&T Acquires BellSouth
spune writes "Only months after SBC's acquisition of AT&T last November, the newly rechristened telecom has announced that it plans to buy fellow Baby Bell BellSouth Inc, of Atlanta, Georgia for $67 billion. This action by AT&T will consolidate more than half of the original Bell System into a single entity, leaving only Verizon and Qwest as remaining Bell family competitors. Analysts predict this deal will be approved by the FCC with only minor restrictions on the new company, which will serve residences and businesses from California to Florida."
Before the next Presidential Election.
The simple truth is that interstellar distances will not fit into the human imagination
- Douglas Adams
Of the original breakup anyway? The baby bells are buying each other and Ma bell.
--- http://davidnehme.blogspot.com
Give it a year or two, and Ma Bell will be back, only without the cool bits this time (Bell Labs).
Well, in English, we have certain things called "tenses."
Tense is generally used to indicate a timeframe relative to the present when something happened, is happening, or will happen.
Notice how in the article, they state that AT&T is planning on acquiring Bellsouth. If you read further, you'll notice other sources say the FCC approval process could easily take around a year.
Because, if this is going to happen, it will be happening in about a year, saying "AT&T acquires Bellsouth" creates a tense error, and if you want to really get technical, yes, it is a fairly big deal especially if you consider how significant the error is.
When did we EVER have competition? Except in the biggest markets, people have never had any choice for their local telco.
The only difference between now, and when it was a monopoly, is that they go by a different name in different areas. They're still just matching each other's prices, terms, etc.
The whole idea of a telco is antiquated. Now, at least we're seeing competition to the telcos via cable and wireless providers.
It probably was just a waste to break AT&T up. What good things can you list, that have come out of it?
Slashdot gets worse every day... Pipedot: News for nerds, without the corporate slant
The prevailing thought in the anti-trust/economics literature is that consolidation is generally regarded as a good thing in cellular..
Basically, there are massive density economies in delivering cellular service (e.g. it's better to use a higher percentage of the capacity of one expensive tower vs. having four separate expensive towers running at lower utilization rates), and as such, there are efficiency gains that can come out of such mergers. We're more likely to see continuing consolidation in national cellular markets with a much bigger space for international competition. The companies want to move forward with consolidation, and the anti-trust authorities aren't really standing in their way.
In the US, the anti-trust people really only care about post-merger consumer prices (rather than the increased profitability of the merged entity). The degree of substitutable goods and the nature of price competition in cellular markets seems to keep downward pressure on rates. This is why they are letting all this go through.
As for VOIP (and the greater economy), you only need two firms to get good competitive results from these types of goods. Landline phones and VOIP are essentially homogenous products, and as such, it's perfectly logical to assume that people will go with the firm that offers them the best price/quality ratio. Outside of collusion, odds are good that you will see competition putting downward pressure on prices in landline telephony even if both landlines and VOIP are delivered by monopolies.
The fact that the baby bells were called "regional bell operating companies" says a lot about how much they actually competed against each other.
Do not downmod posts "overrated" simply because you disagree with them.
The only thing I would disagree with in your comment is that only the government can grant monopoly status; An already established monopoly (established, perhaps, by being the first implementer of a new technology) doesn't need government support to maintain its position, especially in areas where entry costs are high. In these cases the monopoly can often drive new competitors out of business by operating at a loss long enough to ruin the competitor's finances. In reality, of course, the collusion of government is often bought to support the monopoly since that's a cheaper way to go about it. But sometimes it's just the opposite, and government intervention is required to overturn a monopoly that has established itself by choking its competition in the free market.
Judge Green must be rolling in his grave.
You must be a young'en. Let me tell you about how it was back in the day. Ma Bell used to charge a monthly rental fee for each and every phone in your house. Not each line into your house, each phone hooked up that that one line. Want another phone in another room for convenience? You have to pay for it. Each and every month. You weren't allowed to buy your own phone, you were forced to rent theirs.
Ma Bell coming back is NOT a good thing for consumers.
I think we all know what's going to happen next. Either the remaining Baby Bells will merge with the new Big Bell, or they'll establish mutually beneficial ties with one another behind closed doors to make it look like Bell isn't back when it really is.
In other news, the zombie of Harold Greene has been reported roaming about the countryside vandalizing telephone booths, muttering something about 'Humpty Dumpty' and a monolith somewhere...
Less competition = less push for innovation, higher prices, and every reason Bell was broken up in the first place.
No, it was broken up because of an antitrust suit brought by MCI. The sad part was that AT&T was one of the most innovative companies in the world. Witness the transistor - a Bell Labs product. If anything, the monopoly hurt them because they were not (because of regulations) allowed to take advantage of their innovations outside of the telephone market.
What they did have was something that's been dropped - service. You needed a phone installed, it was done, and done quickly. Have a problem? Fixed. Need to talk to someone about an issue? There was someone on the end of the line. Compare that today's "advantages". Need a phone installed? Wait a week or two. Got a problem with your line? Maybe they'll get around to fixing it in the next month. Have a problem with your bill, or need to talk to someone about an issue with your phone service? Welcome to the support hell of pushing buttons, listening to recorded messages, pushing more buttons, and maybe at the end of it you'll get to talk to someone who may speak English. (sarcasm) Oh yeah, we're so much better off!(/sarcasm)
Except VOIP depends on internet service, which is provided by the phone company competing with that VOIP...
I know it's easy to get tricked into the "high entry cost" myth, so please bear with me.
Innovation happens because some shmoe "entrepreneur" smells a profit. If "entry costs" are high, it will require something extra to enter that market. Usually, this is done through innovation rather than trying to beat the established player at their own game.
Wired vs. wireless is a good example of this. Yet still, local governments have extended their monopoly grants to cell phone providers to prevent that very innovation. So is cable TV, which can provide telephone service as easily as it can provide IP, but is almost everywhere itself granted local monopoly status.
I can assure you that the "high cost of entry" myth has been well thrashed since before the time of Adam Smith. After all, without the East India Company, who would risk sending a ship to the other side of the world for something like tea?
The Ludwig von Mises Institute. The reasoning individuals economics
While you make an elegant argument, you forget that AT&T will control a significant portion of the DSL market, which would allow AT&T to set forth the same anti-trust/anti-competitive behavior (by filtering VoIP data).
Not to mention AT&T would then have control of the bigger half of cellular customers in America (Cingular/AT&T Wireless). The last step would be their re-acquisition of Verizon (which would be epic at this point, as Verizon just acquired MCI, which was one of the companies AT&T flagged as a "competitor" in their earlier anti-trust proceedings).
So as a consumer, I can see this leading down a very dark road for consumers.
"Victory means exit strategy, and it's important for the President to explain to us what the exit strategy is." G.W.Bush
Once it comes Ma'bell again, then they will get the FCC to crack down on VOIP, so POTS phone service can be the monolopy once again. You will have no choice of carriers. What if i cant get cable or dsl, but dont want the LOCAL company as my phone company?? out of luck?
It's not a myth and you're an idiot for thinking it is. Nobody ever said that a high cost of entry was a *total* barrier to competition. It's just a signfigiant one, that has a very real and very powerful chilling effect on competition. Hand waving and deciding that no matter how inefficent a market might be, it'll always get better because "someone will innovate something" is ridiculous.
There is no such thing as a "natural" monopoly.
Roads are a natural monopoly. How can you have more than one road in the same place? Sewers. Are you honestly telling me multiple companies are all going to lay sewage pipes so that you can choose which one to hook your toilets up to? These examples are indisputable proof of the existence of natural monopolies, but arguably many other things, even those you mention, are also natural monopolies.
The free market is okay for some things, but it simply isn't the most efficient way of getting some things done. Do you think it would be more efficient for dozens of companies to all run electrical and telephone wires to your home so you can choose which one to buy? Would free market fire companies really protect the community efficiently? If you don't buy fire protection, your home burns, endangering others homes as well. Anything more efficiently run as a monopoly is a natural monopoly.
I can tell from your sig that you are a Libertarian, and Libertarian dogma says that anything and everything can be most efficiently decided by the free market. Back here in the real world, real people have noticed that it simply doesn't work that way and moved on to other ideas.
Have you noticed that there are no Libertarian nations or states anywhere in the world? Every other political philosophy has managed something. Even if it turns into a trainwreck, at least they put their principles into practice. Since Libertarians never actually put what they preach into practice, they can always claim that they have the perfect ideology. If only everyone else would just listen to them and do things their way...
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton
You need to lay an entire network to compete with an established phone company. The phone company you're competing with already has laid, and paid for, that company. So while you take twenty years to build your network and 40 to recoup your investment, you'll be somehow raising that money from customers who have the choice between your network, and the cheaper incumbent.
How the FUCK do you compete with that? Are you on the same planet? There's absolutely nothing whatsoever you can do. If you promise "better service", the incumbent has plenty of time to improve their services. If you promise enhanced features, the incumbent can roll that out to all their customers before you've laid the lines in a single street.
This isn't a myth. It's real. It's why nobody's building fully competitive networks, even in countries where it's encouraged. In Britain, the only competition was from cable TV companies, who were only able to get their networks built because BT was banned from selling television services. And I've never heard of someone asking to build a competing network and being told "no" by any American government. Why? Because nobody wants to.
The only "competition" we'll see in the short term is from the cable companies. In the long term, we don't even know for sure that the cable companies and the telephone companies will not merge anyway. And we already know that a duopoly isn't enough to ensure buyer-focussed products.
We need regulation. And we cannot wait for libertarian utopias to be proven idiotic, especially since I've never come across a libertarian who hasn't find something government related to blame any failure of deregulation upon. The wires should work for us.
You are not alone. This is not normal. None of this is normal.
The 1981 breakup gave the Baby Bells "local dialtone" and big AT&T (and others) "long distance." Now that the technology has all changed, this line of demarcation is obsolete.
It's time for another breakup, and this time it should go as follows: the RBOC's (soon to be the One Big BOC) maintain the physical cable plant, and they maintain the central offices basically as colocation facilities. Then, you have carriers (none of which are allowed to be RBOC's [or the imminent One Big BOC]) as colocation customers in those central offices. They lease customer loops from the BOC/LEC/whatever and then they provide "telecom services" over those loops. We don't care what the services are -- dial tone, DSL, whatever. No distinction between voice and data, between local and long distance, whatever, because as we know, it's all the same crap now.
THAT is the perfect way to keep the government-granted monopoly working efficiently for consumers. The monopoly must extend only as far as it needs to, and no further.
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Well said.
The part that you left out, additionally, is that this lack of talent is exactly what the public wanted.
We want 6 cents per minute? 5? 3? 2? People aren't free - and you know full well how much a *competent* lineman or switchman costs. Given the promise of an automated "smart" system that is run by monkeys, or a legacy labor-intensive, skill-based system that requires "experience" (e.g. TIME)... Cheap, Fast, Correct: Guess which two we (the customers) picked.
In short, we're getting exactly what we were willing to pay for (external forces aside, such as MCI cooking their books, thereby causing market reactions to a fictional situation, etc).
Yes? No? Maybe?
help me i've cloned myself and can't remember which one I am
/. DC?
I like your thinking.
If you promise "better service", the incumbent has plenty of time to improve their services.
Clearly that would be a real tragedy for the consumers.
Comment removed based on user account deletion
I've had horrible experiences with all three companies. I would seriously consider shorting AT&T stock now. Combining two bureaucratic and inept companies will never work!
I took a chance with SBC local phone service two years ago. I tacked on DSL for convenience, but soon regretted it. Every encounter with SBC has resulted in pain and grief. There were numerous misbillings. As soon as I had the chance to switch, I cancelled my service. I will never ever go back to them. I had the same experience with old AT&T. In fact, I currently do not use a land line. If I were to get one, I would use one of the cable companies.
I don't know how these companies can make or sustain profits when they treat their customers like they treated me. There must be some financial shenanigans occurring behind scenes. You can't run a successful business by pissing off your customers.
'There is no such thing as a "natural" monopoly.'
Bull. Water service, for example, is a natural monopoly because of the ridiculous inefficiency associated with RUNNING COMPETING PIPELINES to EVERY HOUSE. A natural monopoly results whenever there is such an economy of scale that only one provider can efficiently provide the product or service. With new techonologies, these types of products and services are becoming less common, but they still exist.
'Only government is able to grant monopoly status'
Bull. If there is a natural monopoly in an area, the free market will cause there to be only a single provider. Even if there isn't a natural monopoly, given large enough startup costs, the first provider in a market can sometimes maintain his initial monopoly through predatory pricing or the threat of it. This is harder to do when it is illegal, like it is in the U.S.
You made some goods points in your post, but the last two paragraphs are just nonsense. I can understand where you're coming from, though, because I used to think the same way. When I was 10.
vi ~/.emacs # I'm probably going to Hell for this.
The trick is that AT&T was broken up BECAUSE of the TYPE of regulation they were under. When AT&T created a "phone system" (Panel, Crossbar, ESS), they designed it for at LEAST 20 years. 20 years ago we were amazed by the "New 386". This was mostly the result of the regulated ROI. Yes they made things to LAST, but they HAD to. They NEED to have a good incentive for FASTER turnover, MORE innovation. MCI and Sprint came along and sold only to the lucrative long distance market, AT&T's bread & buttter. The Long distance market used to help PAY FOR local service. It was set up that way. When the lawsuits started piling up against AT&T, Charlie Brown decided "forget it". He took the chance that the "Bell Children" would be profitable because they would be mostly deregulated. He was right.
This does not mean that "the New AT&T" will do us any good. Without SOME sort of regulation, we're done for. ALSO, you all forget that Verizon *IS* the other "BIG" comprtitior --> GTE. And YES, they are "fated" to merge. Eliminating ALL "big" phone companies, and getting back to one. But we NEED them to be REGULATED. SERVICE was ALL the old AT&T cared about. It was 1,2, & 3 of the top five things they worked toward. We also have to let them make money off their inventions. The old rules did not allow that.
The key to all of this is creating regulation that REWARDS innovation. Bell labs did the transistor, the first work on disk drives, the LASER (independently, but later than Gordon Gould), TELSTAR, and on and on. Without the proper fiscal incentives, innovation will "not be worth it", from THEIR point of view.
Without innovation, we ALL lose, BIG-TIME.
I think this can be a good thing, if we do it right. I also think it is inevitable. The ONE thing we have to LOSE if the 1980's mentality. Greed is NOT good. If we have a single Bell system, and pay the CEO $100 MILLION a year, we are done for. [By modern scales the CEO of the largest company in the world is worth $100 Mil. We cannot have that kind of thinking.]
There comes a time, when a service, good or utility becomes so vital, so pervasive and so common in peoples everyday lives that a nation simply cannot afford to have this essential aspect of their civilisation in the hands of unscruplous private companies.
There are onlt a few such services. Electricity, water, sewage, air, and landline telecommunications. You cannot allow the free market anywhere near these services. If you do, service will degrade, people will suffer and your economy, and indeed society, will slowly but surely fall behind.
Broadband penetration in the US is pitiful in comparision to other OECD countries. There are electricty blackouts in major US cities. People in metropolitian areas are being told to boil their water. This is what happens when you privatise public services. You get the dregs of the profits running them.
Somethings are just too important to leave to the likes of Gordon Gecko.
May the Maths Be with you!
Yeah, but the value of the whole thing was almost solely due to the complete ownership of the national local phone loops. The companies you mention were all either ways to extract more value from the loops (lease them equipment to access the loops) or something to do with the money that looks better in the papers than swimming in it Scrooge McDuck style.
That said, the environment is considerably different now, and just as AMTRAK has a monopoly on passenger rail but hemmorages money, I'm not sure that a phone monopoly is worth all that much today.
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.