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SBC Snags AT&T

Now What? Does Verizon Buy MCI?

By James R. Hood
ConsumerAffairs.com

February 1, 2005
It's official. The boards of SBC and AT&T have approved the sale of AT&T to SBC for about $16 billion.

AT&T • Slamming • Long Distance • Local • Wireless • Broadband • Telemarketers --- News • NY to AT&T: Please Deposit $2.63 Million • AT&T Agrees to Refund Some Ringtone Charges • States Asked to Probe AT&T U-Verse Explosions • AT&T Exits Pay Phone Business • AT&T Changes Contract Policy • AT&T Changes Terms Of Service After Outcry • AT&T Agrees to New Stolen Cell Phone Rules • AT&T Stiffens Language Covering Objectionable Content • AT&T Adds Parental Controls To Mobile Phones • AT&T Slammed Over Rebate Policies • Appeals Court Shreds AT&T Arbitration Clause • Court OKs Rebate Lawsuit against Cingular/AT&T • AT&T Trashes Cingular Brand • AT&T Offers Net Neutrality Concessions To Win Merger Approval • FCC Delays Decision On AT&T/BellSouth Deal • Justice Department Green Lights AT&T-BellSouth Merger • FCC Clears the Way for AT&T-BellSouth Merger • AT&T Trumpets New TV Service • AT&T Web Site Hacked; Customer Data Exposed • AT&T Sues Calling Record Brokers • AT&T Declares Consumers' Personal Data "Corporate Property" • AT&T Plans to Kill Cingular Name • Report: AT&T Acquiring BellSouth • SBC Recast as AT&T • FCC approves AT&T, MCI Deals • Justice Dept. OKs AT&T, MCI Sell-Outs • SBC Will Keep AT&T Name • Consumer Groups Oppose Big Telco Mergers • SBC Buys AT&T • AT&T Will Pay Refunds to New Yorkers • AT&T Will Pull Out of 7 States • AT&T Teams With Sprint to Return to Wireless Business • Minnesota Sues AT&T • Class Action Charges AT&T With Slamming • Another AT&T Rate Hike • AT&T Hiking Minimum Fees • AT&T Faces $780,000 Do-Not-Call Fine • AT&T Will Run Do-Not-Call List • Supreme Court Denies AT&T's Appeal of Arbitration Ruling

SBC thus becomes a juggernaut with enormous holdings in local, long-distance and wireless communications.

The merger will:

• Create the nation's largest telecommunications company;
• Put pressure on Verizon, BellSouth and Qwest to bulk up;
• Put MCI and Sprint, which just bought Nextel, into play.

The new entity will include SBC's local telephone properties in Texas, California, Connecticut and much of the Midwest, AT&T's long-distance business and SBC's roughly 50 percent ownership of Cingular, which recently acquired what was formerly known as AT&T Wiress.

The transaction is certain to elicit howls of protest from consumer advocates, who will claim it reduces competition and drives up prices.

The deal puts Verizon, now the nation's largest telecommunications company, in the hot seat. If it wants to maintain its No. 1 spot, its most likely takeover target would be MCI, the nation's second-largest long-distance company.

For SBC, the AT&T acquisition is mostly about going after business customers in a big way. The AT&T name, though extensively tarnished in recent years, still resonates with older business types looking for reliable business telephone and networking services.

Though among telecom groupies, SBC has a reputation for fearlessness, or perhaps ferocity, it remains largely unknown outside its Texas base, which has been a disadvantage in selling service to large corporate clients.

Though Sprint now becomes a potential takeover target, the fact that it -- unlike AT&T and MCI -- operates a large wireless venture makes it problematic for Verizon and BellSouth. Since they both have large wireless holdings too, there would likely be stiff anti-trust opposition to their acquiring Sprint.

Qwest, the runt of the Baby Bell litter, is in no shape to acquire anything and is hardly an attractive takeover candidate and thus remains where in its customary spot ... on the sidelines.

By Any Other Name ...

What, then, becomes of AT&T's fabled -- or, if you prefer, infamous -- brand name? Because SBC's name is so little known and unharmonious, many marketing types are urging it to keep the AT&T moniker, at least on the AT&T portion of the business.

Corporate pride being what it is, it's not likely SBC will dump its own name and take on that of its latest prize. When Cingular bought AT&T Wireless, the theory goes, it stuck with its own rather pedestrian brand name.

Maybe Cingular would be a singularly simple solution? The entire collection could be named Cingular, assuming BellSouth didn't object. If it did, SBC could simply acquire it as well.

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