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Holy crap, telecom going full-circle?

March 5th, 2006 | General

I just happened upon the news item that AT&T is buying BellSouth.  Confusing enough with SBC and AT&T just having merged, and having formed AT&T Inc.  While I understand the drive to consolidate to hopefully gain efficiencies (size certainly brings influence, pricing efficiencies, and employee redundancies), it’s getting pretty ridiculous with Verizon having just bought MCI.  RBOCs are disappearing left and right.  AT&T, if they pull this off, will be one of 3 telecoms composed of the “baby bells”.  Composed of 4 of 7 of the original RBOCs, with Qwest having one, and Verizon having two, one has to wonder where we’re headed.

Despite a few competitors in their regions for local telecom services, these entities do operate as monopolies would.  Competition is more incidental than anything else.  I don’t know of anyone who’s a fan of their local RBOC, particularly.

Personally, I’m concerned that Verizon, Qwest, and AT&T will be too successful at lobbying Congress and get more legislation in place which is beneficial to a) strengthening their position vs. competitors, and b) providing shoddier service which they can get away with, having gotten their monopoly power via government consent and strengthening it with these acquisitions.

Qwest has to be the next to fall.  Losing money, heavily indebted.  The only question is who’ll pick it up to complete their portfolio, Verizon or AT&T?  Qwest’s got a first-class fiber network, which might go well with Verizon’s [MCI's[Worldcom's[UUnet's]]] IP expertise.  It might also be a defensive move for Verizon to pull off just so AT&T doesn’t get it.  More of a bitter pill than anything.

I’m sure glad I got out of the industry, myself.

  • sugarrae

    Dude, VoIP is going to kill the long distance store… Carriers like Sunrocket and Vonage are getting more and more attention and customer sign ons. It’s amazing… being top for long distance related terms a few years ago brought in double digit sign ups per day. Simply not the case anymore. Ah, and have you heard about Sprint breaking off?

    The whole telecom industry is insane now a days.

  • Administrator

    I use Vonage myself, and it’s $25 instead of Time Warner’s $40 offer… but I’m concerned about tiered internet service and the few outlets that have control. The two internet pipes these days are DSL (going through the monopoly telecom’s phone lines) and cable modems (cable companies being monopolies within their regions).

    Can Vonage succeed long-term with such openings for interference?

  • sugarrae

    True, true. I think one of Qwest’s problems is a website that sucks for conversion and usability as well as an affiliate program that sucks royally. It can’t be helping them compete against the competitors who *do* get internet marketing. I almost fell over the day I saw roadrunner had an affiliate program… but I digress.

    Yea, now you’ve scared me. I couldn’t give a shit about phone service (we got the Rogers broadband service right when it launched and have been happy with it). But you start talking about my internet access and I start to twitch. So what are you thinking? How could the big monopolies effect consumers down the road. After all, all we care about is how it affects *us* hehe.

  • Administrator

    Do you remember the commercials that Qwest ran in the ’99-’00 timeframe? A guy walks into a motel lobby and asks if they have movies, and she says, “We have every movie ever made in every language” and then had the Qwest slogan “The Bandwidth to Change Everything”?

    They had some kick-ass marketing, but never backed it up. Then they bought US West and turned from a long distance and IP runt powerhouse into an old-fashioned phone company. They did it because phone companies were cash cows, and maybe they saw the IP market slowing and prices dropping — but they didn’t take into account how their market was going to go away with the advent of people who *only* had cell phones… or VoIP. They *didn’t get it*.

    Maybe it was the US West influence. Maybe even the higher-ups (like Joe Nacchio) were just criminals and were only pretending to have vision. Maybe they cracked. I don’t know.

    So Qwest brought in an RBOC guy (Dick Notebaert) as CEO, to run his phone company like a phone company. The other RBOCs, as they combined, got wise and diversified a bit. People seem to have a much higher opinion of SBC/Yahoo DSL than Qwest/MSN DSL. Verizon’s got FIOS, their fiber to the curb. What’s Qwest got to compete with that? Hell, maybe it’s because they’re out in states with a population density that competes with Siberia, and infrastructure costs are just too high to make money and provide good service.

    Enough about Qwest…

    Yeah, so I love fat pipes carrying IP that let me do what I want. But the greatest hope for that are on one of two wires coming into my home, coax or twisted pair. Or now that Verizon’s doing FiOS, fiber. But ya know what? Unlike copper/DSL, with FiOS, Verizon’s not required to provide access to other carriers. So… there’s twisted pair from the phone company, the other side of which could be another company like Covad (through whom my Speakeasy DSL service is provided)… the best hope for unfiltered IP. Then there’s cable. They’re providing both the wire and the IP connectivity. They have their own VoIP product. What’s really stopping them from prioritizing their own traffic, and even if they allow Vonage, from making it crappy enough to be unusable? And then the third possibility of FiOS… like Verizon’s going to be friendly to third-party VoIP.

    There are people who swallowed the Kool-Aid on WiMax, wireless internet services. They’ll quote bandwidth numbers… but do they mention that it’s the total aggregate bandwidth for all users, and it’s a half-duplex medium?

    I don’t know where communications is going, but I’m not overly optimistic about the RBOC consolidation. Their influence over government just increases as they get larger. So much for deregulation…