(U-WIRE) WASHINGTON – Last week, SBC announced a $16 billion acquisition of AT&T, pioneering a new standard for wireless communication service in the United States.
“Today’s agreement is a huge step forward in our efforts to build a company that will lead a communications revolution in the 21st century,” said Edward E. Whitacre Jr., SBC chairman and executive officer in a statement last week.
As more and more companies begin to merge, telecommunications companies will have to increase their range of services offered in order to survive in the increasingly competitive market. Services that SBC will offer include corporate data services, local calling, long distance, internet access, wireless, and cable TV. Many analysts predict that MCI and Sprint might be next in line for a merger, followed by BellSouth and Verizon, according to a Feb. 4 article in InfoWorld.
“We will have the intellectual and financial resources to spur innovation and propel the American communications industry forward, harnessing IP technology to deliver exciting news services,” Whitacre said.
SBC, based in San Antonio, is a local specialist with 52 million access lines and 5.1 million DSL customers. Its broadband network covers 77 percent of its local customer locations. It owns 60 percent of Cingular wireless, which has 49 million subscribers, according to a recent press release. AT&T is the national leader in corporate communications. Its global network covers 50 countries and it has 26 internet data centers, half of which are in the United States.
“The combination of these two strong, complementary companies will ensure that together, all the capabilities necessary to compete successfully in serving a broad range of customers across the country and around the globe,” said David W. Dorman, AT&T chairman and chief executive officer. “Together, SBC and AT&T will be a stronger U.S.-based global competitor capable of delivering advanced network technologies necessary to offer integrated, high-quality and competitively priced communications services to meet the evolving needs of customers worldwide.”
Part of the implications of the merger would be access and customers in new parts of the country. A Southwest regional network like SBC will be gaining clientele around the country, and around the globe, thanks to their new partnership with the corporate AT&T. A similar situation would occur should Qwest, a Denver based company, buy out MCI, a merger which has been in the talking stage. Verizon and BellSouth were also said to be deliberating their own bids for MCI, according to a Feb. 7 New York Times article.
Like any union of two companies, logistical and technical problems often occur at the beginning of the partnership. Accounts and clients from both former companies must be acclimated to the new ownership and management. One former AT&T wireless customer, a Washington, D.C., college student, has already encountered billing problems since the merger. Prior to the merger, she had AT&T, but her parents had an existing family plan with Cingular. They wanted to consolidate, so they set up a contract with Cingular to add her to the family account with her existing number. After that, the family got two separate bills; one for the family plan, and for her account.
“My dad spent hours on the phone trying to work it out, and they finally said it was taken care of,” she said. “Then when I was home over winter break, I started to get calls from the collection agency, and found out that Cingular had sold my name to them. It still hasn’t been worked out — I have this outstanding account for $100 which is currently destroying my credit history.”
Though financially lucrative, these mergers pose a severe threat to regional telecommunications companies. If these companies continue to join, there will be much less selection for the wireless customer, potentially lowering the quality of service.