By James R. Hood, ConsumerAffairs.Com
In an odd twist on the prodigal son tale, regional telephone giant SBC
Communications, created in the 1984 break-up of AT&T, has completed
its $16.5 billion acquisition of AT&T and adopted its once-spurned
"We are ready to meet the needs of a new generation of customers in a
new era of communications and entertainment," Edward Whitacre Jr.,
chairman and chief executive of SBC, said in a statement.
Though AT&T is seen by many as damaged goods, it maintains a hefty
share of big-business clients and is an internationally recognized
brand, unlike SBC, an aggressive but bland local telephone provider
operating mostly in the South and Midwest.
Verizon, another AT&T spin-off, is buying MCI, historically AT&T's
primary competitor in the long-distance business.
Both SBC and Verizon have been aggressively building their high-speed
Internet and wireless businesses and are thirsting to muscle in on the
video delivery business now largely dominated by cable
companies. They'll also be pushing Internet telephone services,
commonly known as VoIP.
Although it's SBC that bought AT&T, the new company already looks a
lot like the old AT&T when it talks of moving into the video business
without going through the arduous, expensive and time-consuming
franchise process required of cable systems.
It's a throwback to the way in which AT&T tried to sneak into the
local telephone business in the 1990s, when it wrestled Congression
into passing legislation that required local telephone companies to
lease their local lines to AT&T at heavily discounted rates. P.S.,
AT&T's lobbying prowess proved a lot better than its marketing skills
and the local phone initiative was a flop.
1,000 TV Channels!
As usual in such deals, there is much talk about the wondrous things
to come. In this case, SBC/AT&T executives are waxing poetic about
"new technology" that will supposedly enable the "new" AT&T to deliver
more than 1,000 channels of television programming.
The company's publicists are also effusive about such potentially
vaporous services as Google-style targeted advertising, TV content
beamed to cell phones and movies-on-demand, something that's been just
around the corner since at least the early 1980s.
The "new" AT&T is also opening a retail push in some areas. New AT&T
stores popped up in a few malls, offering various gadgets, including
online gaming. The company is also opening kiosks in Best Buy, CompUSA
and Cingular Wireless stores.
In a marketing maze only the image-mad AT&T could navigate, Cingular
Wireless, owned jointly by SBC (oops, AT&T) with BellSouth, will begin
offering cell phone service under the AT&T name to its business
Meanwhile, customers who not long ago had AT&T Wireless service are
still being hounded to "convert" from their old AT&T plan to a
Cingular plan. Some of them will now, presumably, be encouarged to
switch from their old AT&T plan to the, uh, new AT&T plan.
Copyright 2003-2005 ConsumerAffairs.Com Inc.
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