Entries tagged as ‘at&t’
Holy cow! I was surprised to see in my RSS aggregator this morning an article from the Wall Street Journal on-line conveying a rumor that a proposed acquisition of BellSouth by AT&T could come as early as next week. This is a bold and ambitious move so soon after the merger between SBC and AT&T completed late last year. Im not surprised by the move, but definitely surprised by the timing of the move. This is a lot to digest both operationally and financially in a very short time.
It seems pretty clear that the motivator behind the acquisition of BellSouth is to acquire the forty percent stake in the Cingular Wireless joint venture that AT&T doesnt already own. Cingular has been on a growth trajectory for some time, and it seems only natural that AT&T would want to capture all of that growth.
We can bank on the return of the AT&T brand to the wireless space if this merger goes through. How will AT&T manage this to maintain the goodwill contained in the Cingular brand?
On the fixed line side there are some serious issues that should get sorted as part of the DoJ and the FCC review of this acquisition. This has to do with comments made by both AT&T and BellSouth executives related to applying premium charges to particular types of traffic or certain content providers. These have been very troubling suggestions to turn the model for pricing of Internet access completely upside down, and the RBOCs have been employing some very unilateral language in how they are going to go about putting this model in place. The timing of these comments have been clearly a reflection of the perception within the Bell companies that theyve consolidated sufficient market control to tell the rest of the value chain whats what. Review of this acquisition is an opportunity to really clarify what is and is not going to be acceptable. Of this issue the WSJ had this to say:
Although AT&T and Verizon’s last mergers passed both FCC and Justice Department review with little major problems, the latest proposed merger may face more hurdles. Recent comments by AT&T and BellSouth executives about their intentions to explore new revenue streams from their high-speed Internet services by introducing two-tier or “premium” service for Internet content providers. Concerns about those plans and the concept of “net neutrality,” or ensuring that consumers have open access to all Internet sites and services and businesses do not find their content slowed, has become a major problems for the Bells in Washington.
Ive been thinking a lot about the notion of tiered pricing and premium content, and Ive been making some comparisons between all-you-can-eat fixed line broadband Internet access compared to the pricing for wireless broadband content. There are some consumer dynamics that I think the RBOCs are ignoring or forgetting, and this is the fact that their efforts to sell premium, tiered wireless broadband data content have basically gone nowhere. Who the hell wants to pay $3 to download a Shakira video from Verizon Broadband!?!? I wouldnt watch a Shakira video if you paid me $3! If you dont believe me, take a look at this entry from Om Maliks blog summarizing two surveys on this topic from RBC Capital and the disconnect between mobile carriers and consumers on the topic of wireless content. The walled garden model clearly isnt working in the wireless space.
Tags: Net Neutrality
Categories: CI
Tagged: at&t, m&a
According to this post on boston.com, AT&T and BellSouth are lobbying on Capitol Hill to establish a premium tier of the Internet. Based on the text of the article the nexus of the argument is that the Bell companies need to offer a premium tier to deliver broadcast video services. This is further indication that the Bell companies barely understand their own business and have even less of an understanding of how video services are delivered. Either that or this is an effort to confuse members of Congress.
The telecom companies said that since they are spending billions of dollars to build new fiber-optic networks that can carry more data, they are entitled to give their own offerings the bulk of Internet bandwidth, and to charge others for higher-speed access.
”When costs are being driven into an equation, they have to be recovered somewhere,” said Bill Smith, chief technology officer of BellSouth. ”Why do fundamental business economics not apply to the Internet?
The Bell companies are arguing that they need to offer a premium tier in order to deliver their own video services. I have to contrast the claims of the Bell companies with how the cable companies delver video. In the case of the cable companies video services are delivered using a very different infrastructure than Internet services, and the only thing video and Internet services really share is the pipe into the house, and only then at the physical layer (OSI Layer 1). The two services occupy different electronic streams coming down that pipe and never the twain to meet. This is a very real simplification, and I readily admit that my knowledge of how cable television is delivered is about an inch deep.
The Bell companies are arguing that they need a premium tier for their own video to offer television services. I dont know enough about how the Bell companies plan to deliver their video services over fiber, but I would be very surprised if they were going to deliver it over the same wavelengths (this is fiber were talking about) as their Internet service. Even if the Bells are using the Internetworking Protocol to deliver video from the local head-end to the home, it would make no sense for that delivery to share the same network space as broadband Internet service. If these two streams did share any part of the network beyond the physical connection itself then your Internet browsing would grind to a halt every time soneone in your neighborhood turned on a television.
Does anyone believe that the Internet is really ready to deliver full-screen, real-time video? Multiple video programming to each subscribing household? To multiple households in the same neighborhood? I would be really surprised if the Bells planned to deliver video and Internet over anything more than the same physical connection into the home (again, OSI layer 1 only). If the cable companies can manage to deliver video and broadband Internet without handicapping third-party Internet content then I dont think its asking too much to ask the Bell companies to manage the same.
What I suspect is going on is that the Bell companies are taking advantage of legislators lack of understanding of how telecommunications services are really delivered (and journalists’ lack of understanding from the look of articles I’m seeing on this subject) to make a land grab for control over all of the OSI stack based on their duopoly for layers 1, 2 and maybe layer 3. (Yeah, I still need a post explaining what the hell all this OSI layer stuff means).
Categories: Technology
Tagged: at&t, net neutrality
I need to caveat my comments on this article with a recognition that there is a dispute over how these conversations between BellSouth and the city government of New Orleans have played out. According to an article in todays Washington Post, the New Orleans mayors office is claiming that BellSouth has angrily withdrawn an offer to donate a damaged building to be a temporary headquarters for the New Orleans police. The stated reason is BellSouths extreme anger over the citys plan to roll out a municipal Wi-Fi network.
Hours after New Orleans officials announced Tuesday that they would deploy a city-owned, wireless Internet network in the wake of Hurricane Katrina, regional phone giant BellSouth Corp. withdrew an offer to donate one of its damaged buildings that would have housed new police headquarters, city officials said yesterday.
According to the officials, the head of BellSouth’s Louisiana operations, Bill Oliver, angrily rescinded the offer of the building in a conversation with New Orleans homeland security director Terry Ebbert, who oversees the roughly 1,650-member police force.
City officials said BellSouth was upset about the plan to bring high-speed Internet access for free to homes and businesses to help stimulate resettlement and relocation to the devastated city. Around the country, large telephone companies have aggressively lobbied against localities launching their own Internet networks, arguing that they amount to taxpayer-funded competition. Some states have laws prohibiting them.
BellSouth spokesman Jeff Battcher disputed the city’s version of events.
“Our willingness to work with the mayor and the city is still on the table,” Battcher said. “We’ve been working for over two months on this building . . . we are a little surprised by these comments.
Ive been really down on the RBOCs as of late, particularly in their comments regarding network neutrality and their efforts to counter municipal Wi-Fi. Granted the RBOCs have deserved the criticism, but I am going to give BellSouth the benefit of the doubt on this one. I can think of any number of reasons why there may be a delay or hiccups in the handover of a facility (many involving things like legal liability for a potentially damaged facility). I can see where someone within the city government might have come to the wrong conclusion about the reasons behind that delay. I am finding it hard to believe that a business leader or company would risk the bad PR by being such a complete asshole in a situation like this. This is particularly so for executives and a company operating within such a disaster situation. Bad PR aside, Ive got to believe a sense of humanity trumps the profit motive in situations like this.
Categories: Technology
Tagged: at&t, municipal wi-fi
According to this article in USA Today, AT&T (ne SBC) CEO Ed Whitacre has announced that Cingular Wireless services will be marketed under the AT&T brand. This follows SBCs acquisition of AT&T and re-branding as AT&T over this weekend. Cingular is 60 percent owned by AT&T/SBC and 40 percent by Bell South. Cingular had acquired AT&T Wireless, itself having been spun off from AT&T in 2001. Got all that? Im just waiting for this plot line to involve a case of amnesia, the evil Stephano or some long-lost child returning from a Swiss boarding school all grown up in the space of two years time.
I can see why AT&T are pushing this to consolidate all of their services under the AT&T brand. According to the USA Today piece the Cingular mark will still be used in certain markets, which sounds like about the only thing that could add more confusion to customers. Im actually very surprised that Cingular co-owners Bell South are so blas about all of this.
BellSouth spokesman Jeff Battcher says anything that boosts Cingular’s revenue is good for BellSouth. “This is not an issue,” he said Sunday.
Whitacre also sees a silver lining, of sorts, for BellSouth. If the switch to the AT&T name helps attract customers to the wireless company, he noted, both carriers will benefit.
Now, if I were a marketing exec at Bell South, I would be looking for AT&T to pony up the bill for any goodwill the Cingular brand had accumulated over the years. I would have my counterpart from AT&T on the phone and letting him know, in no uncertain terms, that 40 percent of that goodwill is going to be needed in payment in exchange for my agreement to move this forward. Bell South are getting screwed in this unless they get some sort of compensation for their support in building the Cingular brand.
As something of a telecom nerd, I have to feel sorry for people for whom this is just a service and not a fascinating industry to observe. Im sure the average user doesnt even know what the hell is going on. This has got to feel a bit like Oceana has always been at war with Eurasia and at peace with Eastasia.
Considering the negative press AT&T Wireless were getting in their last days as an independent carrier, combined with the fact that the AT&T brand itself has seen better days, the new AT&T have a whole lot of brand building to do.
Categories: CI · Technology
Tagged: at&t, cingular, wireless
Categories: Technology
Tagged: at&t, m&a
The Washington Post ran an article this morning giving industry leaders a chance to comment on the recent comments by SBC CEO Ed Whitacre as well as giving SBC an opportunity to clarify. My original blog post on his troubling comments is here.
SBC spokesman Michael Balmoris said Whitacre was not talking about charging companies for letting customers access their Web sites. Rather, he said, Whitacre was referring to access Internet companies may want to the “managed and secure” portions of the fiber-optic network SBC is building largely to deliver video to customer homes.
“SBC has not and will not block or limit access to lawful content or applications on the Internet,” he said. “Mr. Whitacre’s comments are being misinterpreted. They were not made in the context of the Internet, but rather SBC’s $4 billion investment in its new fiber network to provide Internet-based video services,” Balmoris said.
This clarification is a very different picture from Mr. Whitacres original comments. I would think that if SBC were concerned about companies looking for free access to their new video pipes the companies they would have railed against would have been News Corp, NBC Universal and Viacom. Why he responded as he did when asked about Google, Vonage and MSN is very confusing.
Industry leaders had this to say about Whitacres original comments:
“It seems like a rather monopolistic attitude,” said Michael Jackson, vice president for operations at Skype. “If the line were free to the user, or the bandwidth were free to the user, then perhaps he’d have a point. But the line isn’t free to the user. The customer is paying for the bandwidth. . . . He’s already paid for it. Why should he pay more?”
“It sounds like SBC is going to block me, try to block me, or try to charge me for something,” said Vonage Chairman Jeffrey Citron.
“Any notion that SBC or anyone else . . . can get paid twice on the same service is a bit ludicrous,” he added, saying it would be like UPS demanding the sender and recipient of a package both pay for delivery.
While I like Cintrons UPS analogy, the reality is that telecommunications companies already get paid for delivery at both ends of the connection. At the hosted end companies such as Google, Yahoo and Vonage are paying for huge pipes to connect their hosting centers to the Internet. At the end user side the end user is paying for her broadband access to the Internet. The fact that SBC and the like are already being paid for providing their pipes is why people reacted so strongly to Mr. Whitacres original comments.
Categories: Technology
Tagged: at&t, net neutrality
A fair amount has been made about the comments of SBC CEO Ed Whitacre in this recent BusinessWeek interview. Rightfully so. Here are Whitacres most troubling comments below:
How concerned are you about Internet upstarts like Google, MSN, Vonage, and others?
How do you think they’re going to get to customers? Through a broadband pipe. Cable companies have them. We have them. Now what they would like to do is use my pipes free, but I ain’t going to let them do that because we have spent this capital and we have to have a return on it. So there’s going to have to be some mechanism for these people who use these pipes to pay for the portion they’re using. Why should they be allowed to use my pipes?
Granted, its not very clear what it is exactly that Mr. Whitacre is suggesting here, but the comments do seem to suggest an abandonment of the notion of network neutrality by incumbent broadband service providers. This is very troublesome. The business model that justified the capital investment in broadband by local exchange carriers and cable MSOs was based on the subscription fees for broadband service by consumers. What Whitacre seems to be hinting at here is that not only will I need to pay for my broadband pipe into my house and then pay a premium for any applications or services that my broadband provider deems as trying to freeload on the broadband pipe. Considering the implications of this statement fly in the face of some FCC decisions and policy statements from the past year, not to mention the conditions under which the acquisition of AT&T by SBC was approved just this very week, I think these comments are worthy of some clarification.
Mr Whitacre will be well reminded that the local loop and cable pipe will see competition from power companies and Wi-Max service providers. Likewise efforts to squash municipal Wi-Fi builds have not been quite the success SBC and Verizon might wish they were. Who knows what alternatives to the local loop well see next. Ownership of the long-haul is sufficiently competitive that if the likes of SBC or Verizon take an unacceptable approach to network neutrality there are the Level(3)s and others in the world to supplant the incumbents for the long-haul element. Abandon network neutrality and eventually the market will find a way to bypass your precious pipes.
Categories: Technology
Tagged: at&t, net neutrality
Theres been a bit written in a few places on the web about the new AT&T CallVantage feature dubbed Heartbeat. The most noteworthy is probably Andy Abramsons assessment here. The purpose of this feature is to ensure accurate delivery of E-911 information to emergency call centers. Andy takes an overall positive view, but I have to say that I come down on the other side of the fence.
The gist of Heartbeat is that each time your VoIP adapter is powered down, you are required to confirm with AT&T whether or not the access device has moved and, if it has, the new location of the box. This sounds like a tremendous, tremendous pain to me. I hope for the sake of any AT&T CallVantage customers who are road warriors that this is an optional feature of the service. Im not able to find anything about the feature in the att.com domain using Google, and a quick scan of the AT&T news releases doesnt tell me anything.
I really do hope this feature is optional, because I can think of about a million scenarios in which a user isnt going to want to take the time to re-register their location each time they take their adapter on the road. Its not too hard to imagine a large number of scenarios in which this feature (this word is being generous) could cause problems in an actual emergency.
The Barton-Dingell telecom bill includes requirements for provisions of location information for VoIP callers making 911 calls. In my reading of the bill this leads me to take away a coming development of GPS functionality into VoIP adapters. This will at least save the trouble of re-registering your exact location every time you plug in your VoIP adapter. This is provided, of course, that emergency call centers have the ability to capture GPS data, and I suspect that functionality is not there yet. Yeah, I need to do some more research.
Categories: Technology
Tagged: at&t, VoIP
According to this tidbit at Reuters, the question of whether or not AT&T would go ahead with their plans to lease wholesale wireless network capabilities from Sprint may have been impacted by the pending acquisition of the company by SBC. AT&T CEO Dave Dorman indicated in a conference call that AT&T would look to potentially leasing wholesale network capabilities from Cingular. Evidently AT&T’s plan is to go ahead and launch a wireless service this year, which is a smart move on their part.
I’m not sure scrapping the plans to go with Sprint is the best idea, though. First, that would cause some serious delays in the plans to launch the service, and AT&T is already severely handicapped as they stand. Secondly, this is a bit early in an acquisition to start with the “one big happy family” thinking. To expect that relationship to be all flowers, candy and long walks on the beach just because of the pending acquisition by SBC would be naivety on AT&T’s part. There’s still far too much room for self-interest of the parties involved to make the assumptions a switch to Cingular would require of AT&T.
Categories: Technology
Tagged: at&t
The boards of the companies met late into the night and, according to the Wall Street Journal, approved the acquisition of AT&T by SBC.
The final price is evidently around $16 billion and based entirely on SBC stock (0.77942 shares of SBC common stock for each common share of AT&T stock to be exact). That equates to a value $18.41 a share for AT&T’s sale price based on the price at which SBC shares closed on Friday. AT&T will also pay each shareholder a special dividend of $1.30 per share at the time of the closing. All of these numbers come from the Journal.
SBC are expected to keep the AT&T brand, at least for business customers. This is a very good idea, in my opinion, because the brand recognition that comes along with the AT&T brand is substantial. What SBC are really buying when they buy AT&T is their enterprise account base, which is pretty substantial.
The deal is expected to close sometime in the first half of 2006. That’s an extremely long time in the telecommunications industry. I would speculate that AT&T will go forward with their mobile offering using Sprint’s network. The terms of the closure of this merger is just too long for AT&T not to do this, and it might make a good talking point for how this acquisition won’t hurt competition. Likewise AT&T should push to take as much business as they can with the CallVantage voice over IP service.
Categories: CI · Technology
Tagged: at&t, m&a
