Within minutes of the Federal Communications Commission giving final approval to the merger of AT&T and BellSouth Dec. 29, the companies involved created a 22-state communications company that takes a big step in reassembling the Ma Bell of decades past, a huge telecom monopoly broken up by federal edict years ago.
However, the world today is vastly different from the one inhabited by the AT&T of yore. Todays biggest prize is Americas largest wireless carrier, Cingular Wireless, until now a joint property of AT&T and BellSouth. Now its completely owned by AT&T and will soon be identified as such.
The merger includes millions of wire-line customers, a vast switching infrastructure, long-distance services and a wide variety of business services. However, wireless service still is the biggest part of the big picture.
“The principal reason for the merger was to have complete control over Cingular,” said Dave Passmore, an analyst with Burton Group. “More and more communications were going wireless, and the ability to sell service bundles to the enterprise, including a wireless component, was critically important to AT&T.”
Passmore said a key strategy will be selling bundled services to business customers that couldnt be offered in the past.
“What I think it means is that enterprises will now see greater bundling from AT&T with wireless and wire line,” he said.
However, theres more to a telecom company than even wireless and wire-line services.
“What were now able to offer with this combined Cingular and AT&T includes wire line, long distance, Internet, broadband, data networking, and now a complete portfolio of wireless voice and data services,” said John Regan, vice president of business marketing at AT&T. “Were now able to leverage the assets from AT&T, such as the global IP network and security and hosting services, and bring in more integrated play as it relates to wireless and wire-line services.”
Regan, in Dallas, said that while its too early to know exactly what new business offerings AT&T will have, they will include integrated management portfolios for products such as managed security, remote backup and storage, and wired-wireless integration.
“Its business as usual at Cingular,” said Cingular spokesperson Mark Siegel in Atlanta. “We still are the nations largest wireless company, but now we have a single owner. Because of what AT&T is doing, well be able to offer converged services, which will be an enormous advantage to our customers.” Eventually, change will come. “Bundled packages will happen over time,” Siegel said. “Youll see the distinction between wireless and wire line disappear over time.”
“Clearly, consolidation is going on in the marketplace,” said Jack Gold, principal analyst for J. Gold Associates.
While the merger does mean that AT&T will be able to provide a wider suite of services, Gold said hes unsure the change will help enterprise users.
“These guys are so focused in providing all of these services to consumers that its highly likely that the enterprise customer is not going to truly benefit from these guys coming together,” Gold said.
In addition, Gold said that the merger reduces competition in some areas, particularly in telecom. “In telecom, its going to be a two-horse race now for the most part,” Gold said. He said he expects prices to go up and the level of service to go down.
But the news isnt all negative. “For smaller players, I think they will actually have more options,” Gold said. “Most of those folks arent interested in getting dedicated T-1 lines.”
AT&Ts Regan said increasing the offerings to small businesses is an important part of AT&Ts strategy. “Small business is fueling this economy, and we want to help that business,” Regan said.
