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By Scott Bradner
We all knew it would happen sooner or later, one of Ma Bell's kids is buying its mother - shades of Greek tragedy - but is mom worth the price?
What will SBC get for its $16 billion?
o A very traditional telecommunications company with a solid traditional infrastructure to support long distance phone calls in a world where long distance is a dying business and is being given way with many cell phone packages along with a plan in place to throw away all of the already-amortized equipment and replace it with new and expensive voice over IP gear.
o A lot of corporate long distance customers, most of whom pay very little per minute for their service.
o A substantial IP- and MPLS-based data network, serving generally the same locations and offering generally the same services as Sprint and MCI do. (See http://www.nwfusion.com/news/2004/0510att.html)
o A number of corporate data customers in a cut-throat competitive business.
o The dusty wall plaques and empty corridors of part of a once great research lab.
o The ghosts of many failed dreams of leapfrogging technologies including wireless last mile (one example, LMDS broadband wireless), voice over cable (which was not voice over IP), ATM as a customer service, Switched Multimegabit Data Services (SMDS), WiFi hotspots (with Cometa), etc, etc.
o The ghosts of many failed attempts at content-based business models including publicly touting a decision to add The Hot Network, a purveyor of hard core pornography, to their cable TV offerings, a proposal that lasted about 10 minutes to charge their e-commerce ISP customers based on the value of transactions conducted over the 'net, and the more recent plans to develop a content-aware network. (See http://www.nwfusion.com/columnists/2003/0922bradner.html)
o A brand name that was thoroughly trashed by its use on one of the worst managed cellular services ever.
o A whole boatload of fiber in the ground in a fiber rich world.
o A bunch of employees SBC has already said will get dumped.
o The long distance service on my home phone, which generates little revenue for them because of the calling package that came with my new cell phone.
To sum up that seems to leave some not very profitable businesses in areas of strong competition and a faded brand name that some commentators thought might be dumped after the purchase. A good deal for the higher-level management folks at AT&T with their stock options and for anyone who bought AT&T stock in the middle of last year and hung on to it, but hardly seems like a good deal for SBC.
One of the news stories I read said that the "experts" felt that no one else would try to top SBC's bid - well, I guess so!
The folks at SBC that decided that the tarnished shell that is AT&T was worth $16 billion clearly are looking at different factors than I have been able to find, or maybe they are using some of the distortion glasses that I saw used many years ago at the Harvard Psychology Department that make everything appear upside down.
disclaimer: I'm sure Harvard appears upside down to some people but it's hard to tell after you have been wearing the glasses for a while, in any case the above value judgment is mine alone.