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SBC and AT&T Begin New Year with Bold Bids
If television news covered business and industry the same way it covers murder and mayhem, we’d turn on our sets every night and catch up on what’s happening in the Great Telecom-munications War of the 1990s. Take these examples:
SBC, the first regional Bell operating company created since divestiture to complete a merger with another RBOC (Pacific Telesis), started out 1998 by announcing plans for a $4.4 billion takeover of Southern New England Telecommunications Group, which operates primarily in Connecticut. The acquisition would give SBC a beachhead in the region controlled by one of its biggest rivals, Bell Atlantic Corp.
The entire industry was stunned on New Year’s eve when a federal district judge in Texas sided with SBC’s constitutional challenge of parts of the Telecommunications Act of 1996. Judge Joe Kendall of the U.S. District Court for the Northern District of Texas (Wichita Falls) on Dec. 31 said that Sections 271-275 of the Act unconstitutionally prevent SBC from entering the $80 billion long distance market.
Two other RBOCs — Bell Atlantic and U S West — were quick to join SBC in the suit.
Kendall’s ruling cast aside years of legal and legislative wrangling that had produced a carrot-and-stick approach that required the Baby Bells to open up their markets to long distance companies before jumping into the $80 billion long distance arena.
Regulators, politicians, telecommunications executives and consumer groups were all chirping loudly about appeals, hearings, filings and other efforts to block SBC’s purchase of SNET and to overturn the Texas ruling. By Jan. 7, the Department of Justice had filed a motion to hold off the Texas ruling on behalf of the Federal Communications Commission, MCI and other interveners.
CWA represents more than 75,000 SBC workers, at Southwestern Bell, Pacific Bell and Nevada Bell, spread over seven states.
Whitacre praised SNET’s 9,700 employees, who are represented by an independent union, the Connecticut Union for Telephone Workers. Whitacre said he does not expect to downsize SNET. “We’d like everyone to stay; we want to grow this business,” he said.
AT&T Acquisition
New AT&T Chairman C. Michael Armstrong orchestrated the company’s biggest move yet into the local telephone market by agreeing to acquire Teleport, a move that some see as a major effort to revive AT&T.
The deal also gives three major cable television companies — Tele-Communications Inc., Cox Communica-tions and Comcast — a collective 10-percent stake in AT&T. The cable companies are majority owners of Teleport.
By acquiring Teleport, AT&T can offer business customers local and long distance telephone service, and data and Internet access, under its own brand name. Using Teleport’s local facilities, the company also would be able to reduce the fees it pays to local phone companies for access to local telephone customers.
David Bowermaster, in an in-depth analysis for MSNBC, reports that Teleport “has built its fiber-optic networks in urban areas to serve high-margin business customers” and has no existing resources that AT&T can use to reach households in smaller towns and neighborhoods. Still, he notes, cable networks today pass by nearly all of America’s households, making the interconnecting financial ties between AT&T and its new partners that more appealing, although upgrading cable wires to make them telephone-friendly would be a major investment and take several years.
Browermaster speculates that AT&T may opt to purchase additional competitive local exchange carriers, such as wireless carrier Winstar or ICG Communications.
Armstrong came to AT&T from Hughes Electronics Co. last October to replace Robert E. Allen.
- SBC Corp. is proving to be the little telecommunications engine that can and does — starting 1998 the same way it ended 1997: with a bang.
- AT&T — after months of internal examinations that produced a new CEO — is making headlines early in 1998 with its $11.3 billion bid for Teleport Communications Group.
SBC, the first regional Bell operating company created since divestiture to complete a merger with another RBOC (Pacific Telesis), started out 1998 by announcing plans for a $4.4 billion takeover of Southern New England Telecommunications Group, which operates primarily in Connecticut. The acquisition would give SBC a beachhead in the region controlled by one of its biggest rivals, Bell Atlantic Corp.
The entire industry was stunned on New Year’s eve when a federal district judge in Texas sided with SBC’s constitutional challenge of parts of the Telecommunications Act of 1996. Judge Joe Kendall of the U.S. District Court for the Northern District of Texas (Wichita Falls) on Dec. 31 said that Sections 271-275 of the Act unconstitutionally prevent SBC from entering the $80 billion long distance market.
Two other RBOCs — Bell Atlantic and U S West — were quick to join SBC in the suit.
Kendall’s ruling cast aside years of legal and legislative wrangling that had produced a carrot-and-stick approach that required the Baby Bells to open up their markets to long distance companies before jumping into the $80 billion long distance arena.
Regulators, politicians, telecommunications executives and consumer groups were all chirping loudly about appeals, hearings, filings and other efforts to block SBC’s purchase of SNET and to overturn the Texas ruling. By Jan. 7, the Department of Justice had filed a motion to hold off the Texas ruling on behalf of the Federal Communications Commission, MCI and other interveners.
CWA represents more than 75,000 SBC workers, at Southwestern Bell, Pacific Bell and Nevada Bell, spread over seven states.
Whitacre praised SNET’s 9,700 employees, who are represented by an independent union, the Connecticut Union for Telephone Workers. Whitacre said he does not expect to downsize SNET. “We’d like everyone to stay; we want to grow this business,” he said.
AT&T Acquisition
New AT&T Chairman C. Michael Armstrong orchestrated the company’s biggest move yet into the local telephone market by agreeing to acquire Teleport, a move that some see as a major effort to revive AT&T.
The deal also gives three major cable television companies — Tele-Communications Inc., Cox Communica-tions and Comcast — a collective 10-percent stake in AT&T. The cable companies are majority owners of Teleport.
By acquiring Teleport, AT&T can offer business customers local and long distance telephone service, and data and Internet access, under its own brand name. Using Teleport’s local facilities, the company also would be able to reduce the fees it pays to local phone companies for access to local telephone customers.
David Bowermaster, in an in-depth analysis for MSNBC, reports that Teleport “has built its fiber-optic networks in urban areas to serve high-margin business customers” and has no existing resources that AT&T can use to reach households in smaller towns and neighborhoods. Still, he notes, cable networks today pass by nearly all of America’s households, making the interconnecting financial ties between AT&T and its new partners that more appealing, although upgrading cable wires to make them telephone-friendly would be a major investment and take several years.
Browermaster speculates that AT&T may opt to purchase additional competitive local exchange carriers, such as wireless carrier Winstar or ICG Communications.
Armstrong came to AT&T from Hughes Electronics Co. last October to replace Robert E. Allen.