AT&T and MCI Near New Phase of Their Rivalry

The decades-old rivalry between AT&T and MCI is coming closer to taking new shape as the nation's two biggest phone companies, Verizon Communications and SBC Communications, near completion of their separate deals to acquire the long-distance companies, which could close before year end. Both deals still need regulatory clearances, but if approved as expected, the long-distance acquisitions will pit Verizon against SBC in heightened competition for the same business customers over which AT&T and MCI had long battled. Verizon and SBC made their respective bids for MCI and AT&T because each long-distance company has highly prized customer bases of corporate and government enterprises. The regional phone giants can offer something to those prime customers that AT&T and MCI couldn't: wireless services. The enlarged companies are likely to try to reshape the way businesses use and buy wireless services, which could lead to more advanced office functions on devices like cellphones and BlackBerrys. It also may spark the development of offers that finally tempt more companies to centralize their wireless purchasing. The deals still need approval from the Federal Communications Commission, antitrust regulators and officials in several states. Consumer advocates have protested that removing AT&T and MCI deprives large numbers of consumers of their most accessible alternative to buying phone service from the regional Bell companies, and some businesses are concerned that they won't have the Bells as alternatives if they don't like what they are hearing from AT&T and MCI. Analysts expect the price competition in business services to moderate after the mergers, which could make it harder for business customers to find bargains on standard services. But most analysts anticipate few serious regulatory obstacles. Regulators could impose some conditions, such as requiring the companies to sell off some overlapping local data lines or making the Bells sell high-speed Internet connections to consumers without requiring them to also pay for phone service on that line. The companies would probably regard such conditions as minor concessions.
[SOURCE: Wall Street Journal, AUTHOR: Shawn Young shawn.young@wsj.com]
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