SBC Recast as ATT; Another Brave New World

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 parent's name.

"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 customers.

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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