Cue the violins for the telecom gang

Boy, it seems like only yesterday, doesn’t it? The day that U.S. regulators busted up AT&T, I mean, and created the seven regional Bell operating companies or RBOCs, also known as the “Baby Bells” — including Southwestern Bell, Nynex, USWest and BellSouth. And how many big telephone companies are there now? Well, there are four: AT&T, BellSouth, Qwest and Verizon. And it looks like soon there will be three, if AT&T gets approval for its $67-billion (U.S.) takeover of BellSouth. The company that is now calling itself AT&T is actually Southwestern Bell or SBC, which bought AT&T last year for $16-billion and assumed the name.

Over the past decade or so, AT&T had acquired Pacific Telesis and Ameritech (two other Baby Bells), while Verizon bought Nynex and Bell Atlantic, and USWest merged with Qwest. Of course, there was also that whole sordid mess involving Bernie Ebbers and WorldCom (the shell of which became MCI), but let’s not get into that. If it feels a little like AT&T has been putting itself back together again, that’s not surprising, since in many ways it is — or at least creating a duopoly where there was once a septopoly. As Mike Masnick at Techdirt put it recently, Ma Bell is “getting the band back together” for a kind of reunion tour.

And how is the company going to make this mega-deal fly, especially when it will create the single largest telephone company since AT&T was broken up? Get ready to hear a lot about how the telecom market is hyper-competitive and local phone service just doesn’t make money any more, how voice-over-Internet is killing the industry and carriers need more volume to be able to compete, and how the idea of “network neutrality” just doesn’t pay the bills any more, and therefore AT&T needs to be able to charge Google and Yahoo and others extra to get their digital info to users on time.

That’s a tune Ed Whitacre of the new AT&T has been singing for some time now, and this is only going to make him boost the volume, as my friend Mark Evans points out. But will regulators buy it, or will it sound a little off-key when it comes from one of the world’s largest phone companies? Vinnie Marchandani at DealArchitect has a good take on it, and Blake Ross has a satirical take on the press release that is worthy of The Onion.

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About mathewi

I'm the chief digital writer at the Columbia Journalism Review in New York, and a former writer for Fortune magazine and the Globe and Mail newspaper.

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