Assuming SBC does swallow AT&T (no doubt for less than BellSouth was offering earlier) would provide important lessons. (The image is from FreeBSD developer Greg Lehey, and was originally produced in 2002.)
First and foremost, it would be the murder of a great company by the government. It was government that broke up AT&T in the 1980s, and it was government that made AT&T non-competitive in our time.
Second, of course, it means that business tributes to the U.S. government are even more important than previously imagined. If the government can murder the nation's largest company (albeit over time and in chunks) it means no company is safe from a rapacious government, regardless of party. (Is is coincidence that AT&T was forced to divest during the Reagan Administration, and killed under Bush II? Check the campaign contribution files for the answer to that one.)
But wait, there are more lessons.
- The old AT&T is being recreated, this time from local service out. SBC would own the biggest hunk of long distance, the biggest hunk of local service, and the biggest hunk of the cellular market (through Cingular). So what did all this anti-trust activity get consumers anyway?
- The new Ma Bell is based in Texas. Curious coincidence again?
- Consolidation is going to continue. No company is now safe from it, if this deal gets approved. The recreation of Ma Bell, Phoenix-like, is now well along.
- The new Ma Bell will be far less consumer-friendly than the old one. The old one felt that it had to please consumers (in some way) to maintain the kindly attentions of government. The new one knows it just needs to keep paying politicians -- big time -- and it can do what it wants.
- Finally, thank God for Moore's Law. There will be ways in which anyone can avoid this combination of power, and rapid change is going to degrade the value of their assets quickly over time.
- What Edward Whitacre may find he has bought is not a great Unsinkable Company, but the telecommunications version of the Titanic. Only without the great theme song. (Although if he wants to get Celine Dion for his ads, I'm sure she's available.)
In 1907, AT&T president Theodore Vail thought that phone service needed to be a monoploy providing universal service in order to maximize profits and set out to use government to make the Bell System a monopoly at the national, state, and local levels. It was only through a lawsuit by an obscure communications company that focussed on transportation communication (MCI), that Judge Green ordered AT&T to be broken up!
You need only look at one thing to see that divestature and all the follow-on deregulation of the phone industry was a hugely good thing. When I was 10 years old (1980) and a relative called "long distance", it meant something, like $20-ish per hour on the phone in 1980 dollars. Today, the term is pretty silly, and most of us pay $3-ish per hour in 2005 dollars for an hour of phone time (if we don't have an all-you-can-eat plan). I appreciate the nostalgia for AT&T -- my Dad was a career empoyee of Pacific Telephone and followons -- but really, who cares? Costs continue to go down, features increase, etc. A dynamic market at its best.
Permalink to CommentI don't believe you can blame the Government for AT&T's decline - The long distance market was the revenue generator initially, but everyone figured out that you couldn't depend on that.
AT&T never nourished the enterpreneurial culture, innovators left Bell Labs for startups, and then AT&T broke itself into Equipment, Wireless, and Long Distance arms that failed to achieve meaingful customer-capturing synergies between the units.
Why did HP achieve success reselling commodity items such as PCs and printers, while AT&T could not? I don't claim to know the full answer, but a lot of brainpower was spent anguishing about how to compete in the new reality.
AT&T had a powerful brand, but did not (in my opinion) leverage that brand to mean 'Communications', it just meant 'Long Distance'. AT&T could have bid on spectrum for a re-entry into the local market, but there was no serious attempt to maintain the customer touchpoint they had when they were 'Ma Bell'
Contrast with Apple, which thinks of itself as a well-funded startup which develops entirely new markets and applications every few years.
Permalink to CommentTo add to Ralph's point... Exhibit B: Lucent. What was the successor to Bell Labs doing with a golf course?
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