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Qwest bids $55 billion for US West, Frontier
wanderingstar writes "Bell South owns 10% of Qwest, the US' 4th-largest long-distance carrier and owner of a very high capacity backbone. Qwest has bid $55 billion to acquire US West (another Baby Bell) and Frontier. US West, in turn, is planning on acquiring 9.5% of Global Crossing (a competitor of Qwest's with their own $40+ billion bid in for US West) - a stake that would be included in a potential Qwest purchase. Anyone else need a roadmap to figure out the telecom business? " My big concern with these is that we are seeming to run into the same sort of incestous relationships that have plagued certain countries industries. Am I unfounded in my concern?
I think that the internet may be too good to be true as is.
Corporations are getting too big and the government is too small and weak to really do anything about it. Look at the MS trial, what harm is really going to come of MS from it? Not much.
If the internet becomes too expensive for me personally (to use at home), and at work I am behind a restrictive firewall, well I have no choice but to give up on the internet as a useful tool for my own personal gain. Without the internet, I might as well throw out my PC too. Disgust would drive me too it.
EverCode
I'll tell you how Worldcom got where they are: long distance phone slamming. I personally and many people I know have been slammed by them, and when I called the better business bureau they told me they had gotten hundreds of complaints recently, just in my county.
This was also before they merged with MCI.
I don't think Frontier is a baby bell. I visited their heart in Rochester because our company installed a product there (that they later returned, battered and broken).
Frontier is known in the MN area as having atrociously bad customer service. Until they closed the office here in the Twin Cities, when you walked in to talk to someone, you were greeted with a row of phones in front of a big pane of bulletproof glass that didn't have any people behind it.
Need a Python, C++, Unix, Linux develop
I'll tell you how Worldcom got where they are: long distance phone slamming. I personally and many people I know have been slammed by them, and when I called the better business bureau they told me they had gotten hundreds of complaints recently, just in my county.
This was also before they merged with MCI.
I'm not joking. These guys are cl00bies. Awhile back, they had some kind of press release about how they were getting in bed with Microsoft for various server applications. This was pretty evil, but it can largely be ignored if they insulate the customers from it.
The real problem is the lack of clues on the part of their supposed net engineers. I get my primary routing through them (formerly sni.net - look it up) and they had my netblocks routed into the bit bucket FOR OVER 24 HOURS!
Tickets were flying, yes, but these guys could NOT get it through their heads that it was a routing issue and not a physical circuit problem. They had USWest check this and that, but traceroutes clearly showed where it was going wrong and that only certain IPs were screwing up.
The moral of the story? Don't trust these guys any further than you can throw their piles of NT install CDs and worthless "experts".
Oh yes - I believe their "fix" was to reboot a core router somewhere in Denver. Funny, I thought the "reboot to fix things magically" only applied to Ascend and Microsoft products....
Hmmm, potential competitors merging = fewer competitors = "all sorts of competition on the horizon". Even us anti-trust socialists can tell that doesn't add up.
The fun thing is, "There's always a bigger fish." (sorry, Qui-Gon)
;-) And C&W owns MCI's former Internet business, which gives them competitive strength in the market.
Everyone is paranoid about Qwest becoming the next AT&T when there are a lot of other companies doing similar things, quietly. Yes, there will be a lot of really huge companies running the telco show for a while, but they ALWAYS get smacked around by a small company in the next economic upheval. (WorldCom is the seminal example of the 90s. MCI is the seminal example of the 70s and 80s.) It's the nature of corporate and competitive evolution. And if the big U.S. companies get lazy, faster foreign companies will come in and compete with them (U.S. automobile market, late 1970s).
Here are just SOME of the waiting-in-the-wings competitors:
Level3, whom I think will probably merge with Sprint in a blockbuster move. They're doing a Qwest "if you build the fiber, they will come" strategy, but they're not selling traditional circuits or cloud services. They're going to be wholesaling IP, that's it.
PSINet, who is just ACHING for a telco merger partner to get some respect with (like UUNet did with MFS and WorldCom). They've got the network and the know how even if they are perceived as a third-choice vendor.
Euro-powers: Telekom (Germany) will make a bid for France Telecom's share of Global One soon, which will put that company in the drivers seat of G1. G1 has a lot of clients in the US. Meanwhile BT has been cut out of the US market by its alliance with AT&T in a move incredibly reminiscent of (forgive me) the Hitler-Stalin pact.
Asian-powers: NTT, KDD and others are also eyeing the US market.
The key is opening up the local loop, which is happening in spite of the baby bells in many places. I, for one, get my phone service from my cable TV provider here, and it's NOT AT&T. Cell phones are becoming so ubiquitous that many people are using them as their primary phone.
The mergers we're seeing are a manifestation of the dynamism of the industry, not necessarily a competitive threat. LET Qwest by USWest's problems, and either reform 'em or fail. Either way, the end consumer wins.
That's just how I see it.
Phil Anschutz (large force behind Qwest) is a ruthless and cagey businessman who knows how to run a business and make a buck along the way. Phil is an old oil tycoon who did railroads and then telecom as the markets changed. He's one of the best-known businessmen in Denver, and for good reason.
Solomon (Sol) Trujillo (US West) can't seem to keep his company running, much less make any progress. US West is a joke among their customers and other telecom people. But they have valuable assets and customer base.
Don't get me wrong, the time period immediately following a merger of the two wouldn't necessarily be pretty -- Phil's known for brutal management when necessary, but I bet the combined company would come out of the gate kicking butt.
Everyone I know who works for USWest has told me that no-one understood the merits of the Global Crossing deal, but everyone feels Qwest could work wonders.
-- There is no truth. There is only Perception. To Percieve is to Exist.
I hate US west as much as the next guy, but your AT&T/TCI lovefest is a bit premature.
1. As any AT&T data customer can tell you, their customer service is abysmal. Lies go down, tickets are opened, vice presidents are written, no explanation ever comes.
2. AT&T is quite happy to demand access to other people's cable pants, but they bitch and moan and throw a fit when people want access to theirs. Fair is fair.
3. TCIs customer service is even worse than AT&Ts.
4. Forcing people to provide access to their infrastructure at competitive rates can work rather well for the consumer. If we had to rely on USwest for DSL in seattle we would be getting nowhere fast. Fortunatly, Covad can rent copper from USwest and hook it to their own network. The result: When US west was promising 3 month install times, covad was doing in three weeks. USwest is feeling the competition too. Their install times have dropped and they just cut their prices by $20. This from a company who has been trying to jack up the price on ISDN for years.
My company exclusively uses Frontier for all communications. They have a proprietary arrangement with an email service in California on their sonnet network and we are in Cincinnati, OH and our email is sent and back within one call. It's fast, real fast. And our long distance costs are below $.06 . I'm very excited about the new opportunities this merger will bring.
...a three hour tour,
Hopefully this merger would make things better for US West customers. It would be hard to deliver worse service than they already do!
US West has a bad habit of abusing its employees, as well as its customers. Recently, for instance, they were going to refuse an overdue promotion for one of their line people in our area because he was going to be retiring soon. He's one of those rare people that you would hire in a heartbeat. Other line employees threatened to walk off the job in protest. They all received notices warning them that they would lose their jobs, but the situation was defused by giving the guy his promotion.
I will be moving about three miles in August. I already have my order in for the phone lines to be moved, and I asked to keep my present numbers, since the area is within the same exchange. My experience with this company leaves me wondering if I've provided sufficient advance notice for them to get things right without turning off the phones here later on THIS week instead of the middle of August!
This is a company that's worth buying? I don't think so!
This wasn't exactly news to me, since I read it on the front page of The Denver Post's business section...
I can hardly express how happy I will be if Qwest does indeed buy USWest. If you have to ask why, then you must not be a USWest customer. Their service is abysmal. Analog connections above 33.6Kbps are IMPOSSIBLE in Metro Denver because of the shitty condition of USWest's lines, which they would never even think of upgrading. Their DSL service is wildly overpriced, at $50/month (including line and ISP) for 256Kbps. Some Canadians I talk to on IRC have the nerve to COMPLAIN about paying $55can/month for 1.5Mbps!!!
I can only guess that USWest's monopoly in these parts has taught them to be lazy. When I heard that AT&T/TCI would be laying a new framework in order to deliver phone/TV/Internet, I was overjoyed! But then the Denver City Council took a page out of Portland, Oregon's book and decided to delay the construction so they could force AT&T/TCI to share out their lines. What BS! They lay the lines, they get to do what they want with them. Unfortunately, as you probably know, Oregon won their little dispute, and now it's doubtful whether AT&T/TCI will continue their project there AT ALL. The same is likely to happen here. But now with the prospect of a Qwest buyout of USWest, there is new hope in Denver of inexpensive, reliable, and generally high-quality phone service and broadband internet access!!!
MoNsTeR
"Did you hate those where a certain company claims credit for products that don't even exist? You will!"
I have seen the OC maps, the sonet maps, the layout in various cities, and I have to say it's impressive. I'm so psyched with this company, I may need to buy a lot of stock from them.
But it's gonna be an odd lot, I can't afford to blow 3500 dollars on one basket.
Lowmag.net
2. MaBell was assembled from various regional companies before they were broken up in the 80s.
3. I didn't think that Qwest actually bought the rail lines outright, I thought they just acquired rights of way from the railroads. Isn't it interesting that the governments big give away to the railroads is being used to shrink time and space further.
Good point about MCI, never the less, they wouldn't be where they are today without goading the government into going after MaBell with the sharp knives.
I thought Rochester was a scrap from AT&T.
Clearly though, telcom is totally inbred and has been for a long time.
In high school the teechurz learned me good about interlocking directorships and the bad things that happen when oligopolies run the world.
...
Wasn't there something called the Clayton Anti-Trust Act. Oh, forget it, I hear my spirit guide calling me to my death education class
Yeah, but god has all the good private peering arangements.
It's very intelligent to invest into Qwest, though I'd wait another day until this calms down. The great part about it is, they'll be offering excellent internet services at cheap rates, provided they do take over US West.
Jeez, some of you guys are just not getting why this is significant. By purchasing Frontier, Qwest would have access to Frontier GlobalCenter, the crown jewel in Frontier's acquisition spree of several years ago.
They've been operating as a lean, mean machine for several years, and have quietly taken hold of some of the largest sites on the Internet today. Do we really want Qwest, the granddaddy of "last-mile" services taking over the lowest level content distribution market???
--globalnap.net, product of pure caffeine--
I anticipate Qwest will clean up US West and even offer powerfull connections to compete with Cox. Even, eventually, offer a digital phone service, such as what Cox is doing as well.
>Pretty soon a handful of companies will own all
> our forms of media disribution, everything we
> read, hear, and see will be at the behest of
> our corporate masters. Microsoft and AOL are
> tugging it out in the high speed access/cable
> tv arena.
Oh yes. Especially in the UK. MS are currently taking stakes in a large proportion of our cable operators (anyone know what that proportion is?). We thought having BT as a monopoly wasn't a good thing, but I'm sure we haven't seen anything yet....
Posted by Assmodeus:
yeah tell me about it... my dads company just purchased 23 t3's from philly to new york city... and theres a shitload more where those came from...
US West's 'service' is poor enough that I've considered moving just to get away from them. The local office hasn't updated their equipment is something like 15 years, so there are half-completed calls, no dial tones, drops and every other telecom disaster you can imagine. Even on off hours they can barely bring enough capacity to bear to handle the local calls, let alone dialup, etc.
Of course it may not be a problem much longer. Things have gotten so bad that the city is trying to kick them out, or at least force them to try to harder. I'm helping with the research (evil grin).
(Of course, I'm in communications hell. Falcon Cable, home of the $29 basic cable service (up $8 since the FCC ruling was appealed). Oh, and enough line noise that I can barely top 26k on my 56k modem--thank you GTE...)
I don't know if any of you heard about it, but down here in AZ, there was a big strike by US-WEST employees. I was unfortunately thrown into one of the backup teams, and I would not like to repeat that experience. So, if Quest wants to bring in their own guys, I think it would be for the best.
Posted by Assmodeus:
yeah tell me about it... my dad and his company just purchased 23 t3's from philly to new york city... and theres a shitload more where those came from...
I spoke with my Frontier rep and the one of their vice presidents and they said they aren't even going to entertain the idea of Qwest. While they did say that the redundancy on circuits would create a rock-solid network, it's just not in their best interest. Maybe U.S.West will go this one alone?
Who know? The Shadow Knows!!
...a three hour tour,
Well, that has been the belief over the last 20 years or more. In reality, the competition isn't there. I still have to pay $20.00 per month just to have a phone. The per minute charges are on avg about 15-20 cents/minute or about $8/hour for long distance - whether 30 miles away or across the US.
If there was so much competition, why hasn't the monthly and per minute charges decreased instead of hold steady? I can only get GTE (local) and AT&T (long distance) in my area of the country. This hasn't changed in 20 years!
So is there competition? NO! Just a constant rearrangement of the companies. And when a competitor just gets big enough to cause an impact, they merge with the regular ol' big boys with no government intevention to stop the merge due to reducec competition.
Another example is that recently the "supposed" competition for natural gas to the house. They were going to reduce my gas costs a couple of cents and hold it at this price all year. The only catch was that you had to sign up for a year. Normal monthly costs would still come from the old gas company. I couldn't get rid of them. As it turns out the "supposed" competitor was just a spinoff subsidiary of the local gas company. Hence the same gas company. I told the salesman, that if the spinoff could reduce my costs, then the main parent could just as easily do so and thus eliminate the need to deal with two different gas companies (whos responsible for the bad service - the sub or parent?). Just reduce the cost for the gas coming from the parent company. THus no competition.
The same applies to the electric company too! They were just parent company spinoffs.
The state and local lawmakers could "technically" say that there is competition. They just forget to mention that you are still dealing with the same company but under the guise of , nor can you drop the parent company. It's good image vote building for the polititcians.
So..... there isn't any competition in the utility industry and only when they are regulated by law to force them to control their costs or reduce them do my costs come down. Is this competition? No. but at least my bills are lower.
As for the saleman, I just laughed at each of them.
Remember the part in T2 when the bad guy (AT&T) has been .... and ..... they ..... then it gets creepy and the bits melt and start blobbing ..... well that's the stage we're at now ....
frozen and broken into a thousand pieces
everyone breathes a sigh of relief
can get on with their lives
together
All I know is that I was about to buy some Qwest stock, and I'm glad I didn't buy it just yet. After that takeover bid, the stock dropped over 10 points today from 45 to about 34!
At any rate, in a purely financial sense, is it worth putting some money into Qwest at this point?
For those of you paying attention to the stock, it lost a bunch today on announcement of the news -- as did several other tech stocks.
The Baby Bells have been trying to get back together for years; that should surprise nobody. They started doing so right after they were allowed to do so again.
However, more and more people in the data/IP industry are convinced that relatively soon, data will be regarded as a mere commodity; it won't matter who you buy from, unless you've got stupendous amounts of capacity. IP will effectively become another utility.
One of the main reasons why buying out Frontier is so attractive is that Frontier participated in the last Qwest fibre buildout, and now Frontier has excess fibre capacity; Global Crossings, on the other hand, is laying tons of trans-oceanic fibre (and its only real competitor right now is the CW unit.) Lots o' trans-ocean and lots o' trans-US fibre complement each other nicely... and trans-{Atlantic, Pacific} capacity is still sufficiently rare that it won't be considered a mere commodity in the near term.
Interesting to note that by gobbling up US-Worst, this could make Qwest the ILEC in the Denver area, aka the stomping grounds of Level3. Makes me glad I didn't take that job with L3... :-)
--j
The unsig!
it doesn't matter if this is a good or bad idea.. there is all sorts of competition on the horizion in telecom. I just hope the anti-trust socialists stay out.
I've had dealings with Qwest recently. They haven't even lit HALF of the fiber they have laid, and already they have more bandwidth than any body - perhaps even God.
On the other hand, US West... well, Quest can't hurt, that's for sure!
to end user's homes, that is. They have invested a tremendous amount of money creating one of the wrold's largest fiber networks. The question remains, what is going to fill it? Business data? Movies-on-demand (as their new commercial suggests) Scientific data? It seems they are now thinking voice long distance, which seems to indicate they now understand the basic glitch in their plans, which is that huge amounts of data flowing between tens of thousands of points(businesses/universities) isn't going to fill the pipe. That will take moderately large amounts of data flowing between hundreds of millions of points, and that means your average consumer. Unfortunately, the last mile to those average users is still copper wire, low bandwidth. Thus, it makes sense for Qwest to use some of their huge bandwidth for long distance voice service.
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton
(in addition, the data unit of Frontier [GlobalCenter, neé ISI/PrimeNet] only has a couple hundred employees, yet is forecasted to provide a very very large chunk of Frontier's profits.)
geez...
-- your knees hurt, don't they?
The problem isn't really when telecomm companies buy each other -- in fact, I'd argue that because of economies of scale, that's a good thing: they're able to reduce costs while putting together a large network. The problem comes in when these companies don't have much competition. We still have AT&T, MCI/Worldcom, Level 3, Bell Atlantic/Nynex, Bell South, Ameritec, Sprint, GTE (well... didn't they just merge with somebody?) and a few dozen CLECs.
My guess is that you'll continue to see consolidation along the way, and we'll end up with a handful (3-5) of companies which will compete fiercely with each other.
The thing I think is the most bizarre about this is the sheer difference in size. According to the WSJ, Global Crossing has 148 employees -- they're a *START-UP* company that's trying to buy US West (~54,500 employees) and Frontier ( ~8100 employees).
If this has you worried, I have to wonder where you have been.
A fragmented background on many of the players.
1st. Bell Atlantic and USwest are made of peices carved from old MaBell. Other peices include present day AT&T.
2nd. MaBell was formed by balling up all sorts of small regional telcos in the earlier part of this century.
3rd. Qwest was started by a former AT&T guy and a former railroad guy (he knew how to get rights of way for all that fiber!)
Elsewhere we have MCI/Worldcom which was formed from MCI and worldcom. MCI was at the vanguard of the charge to break up MaBell in the first place. Worldcom was made from MFS, Wiltel and UUnet, among others (I think). As part of the MCI merger, MCIs IP backbone was sold to Cable & Wireless who themselves strung the first transatlantic cable.
Wiltel's fibernetwork was built by Williams in Williams old Natural gass piplines. Williams sold of the network, signed a noncompete, used that time to build capital and now that the noncompete has lapsed, they are building a new network.
Back to MFS. After selling out, some MFS founders decided to build Level3 communications which is currently leasing fiber from Frontier/globalcenter while they build their own network.
Frontier, I believe, is formed from an old baby bell.
I may have some of this wrong, but not so wrong that it makes the whole post wrong. Point is, telecom is heavily inbred. Brothers, mothers, sisters, cousins, all interbreding.
The basic idea these days seems to be to build a network of terabit fiber and then go get some customers. Unfortunately, despite deregulation, the only way that these companies can imagine getting customers is to buy local phone companies lock, stock, and barrel, and herd their customers, most of which have never even used the internet, in the general direction of ADSL and cable 'net access.
This seems kind of odd to me, but I guess it's considered normal by phone company executives who have never done it any other way. It's an unfortunate by-product of a process where backbone capacities have improved quickly, but local loop (frontbone?) capacities are lagging - the companies have to get their goods to market, but can only do so by buying into slow-growth, highly regulated local monopolies.
It would be great if some of the independent ADSL providers could get into the local market. My take on the Qwest and Global Crossing efforts is that the leaders of these companies think the independents will be squeezed out by the local telco monopolies. They're probably right, as most people probably have no idea that their phone lines could be piggybacked with another vendor's ADSL, and hooked to an ISP and backbone feed separate from the phone company.
---- "If we have to go on with these damned quantum jumps, then I'm sorry that I ever got involved" - Erwin Schrodinger
Alot of customers of US West have complained about how bad service has been, and also alot of spam with sites pointing into US West's IP space has been spewing out. Getting someone who knows how to handle the business at the other end of the line is like finding a needle in a hay-filled silo. I think they're up for a nomination into the Realtime Blackhole List for not being responsive to complaints.
They don't say US WORST for nothing.
---
Spammed? Click here for free slack on how to fight it!
--
# Canmephians for a better Linux Kernel
$Stalag99{"URL"}="http://stalag99.net";
Sigh, I've been watching this happen for years as have the rest of you. Pretty soon a handful of companies will own all our forms of media disribution, everything we read, hear, and see will be at the behest of our corporate masters. Microsoft and AOL are tugging it out in the high speed access/cable tv arena. Now companies are merging in the telephone industry again. Remember AT&T? We're going to end up with entire portiton of the internet owned by one or two companies (yes I realize that now many backbones are operating by a handful of companies but that number is going to get much smaller) and all of our broadcast television is going to end up whatever Microsoft or AOL wishes us to see. All of our content will be provided by Fox and radi owill remain in the hands of CBS, NBC, and ABC. Everything will be censored according to the particular company's user policy. Big corporations win, we lose. Without the ability to choose between one provider and anaother we'll end up with the kind of treatment AT&T provided before being broken up. You have to have one of their techs install a new phone (or cable box or any other medium of data exchange), if you have a problem with the service...oh well. You're no longer a person, just a marketing statistic, you always have been and for the forseeable future always will be.
I want you to get up, get up right now and go to the window. I want you to stick your head out the window and yell at the top of your lungs, "I'm mad as hell and I'm not going to take it anymore!"
Support your local destablizing element.
I'm a loner Dottie, a Rebel.
I only have two weeks or so experience with US West and I'm already fearing the worst. With plans to move into my new place in Minneapolis on 1 June, I called a week prior to set up new service so it would be ready the day I got there. Well, lo and behold, it didn't work on 1 June, so I called. They explained that 'someone' had pushed the date back on the computer and it would be done on 2 June by 5 PM. The next day someone stopped by while I was out and left a message saying that I needed to call an 800 number to schedule an appt. to complete installation. When I called, they explained that they hadn't anticipated needing to get inside so they couldn't have forewarned me about the possibility of needing to be there, and oh by the way we can't set you up now until Saturday 5 June. Great. And they need a four hour window to do it. Better. So my roommate and I completely rearrange our schedules to be home from 2-6 PM on a beautiful Sat. afternoon, and guess who NEVER shows up--US West. I call AGAIN, and it is explained away as a case of the problem simply 'not being assigned to a technician'. Well, at 7:45 PM on Monday 7 June they finally did it. And now the kicker is that when I originally called before I moved in, the guy ran a line check and found that I qualify for the 256k DSL service, but now I don't anymore for some reason. Stuck with dialup...hmph. A pretty lousy situation after being spoiled by 10BaseT for the last four years.
US Worst seems to be a fairly apt moniker in my estimation.
The drop in stock price is an important point. The proposed buyout involves cash and an exchange in shares of stock. If the buyer's stock value drops then the offer is not as good a value.
The key thing is to monitor the stock value over the next few days (if not weeks). Note that the value of Qwest stock should increase tomorrow.