One down ...

For the competitive industry, Jan. 31 was not a good day. It lost its champion when SBC Communications Inc. announced it would acquire AT&T Corp. In many ways, the months leading up to the fateful day already betrayed the waning spirit/power of the once almighty American telephone company.

Blows incurred over the remanded Triennial Review Order forced it to retreat from yet another market - consumer long-distance. AT&Ts last jabs at the Bells - the seemingly spiteful partnerships with their rival cablecos - felt good to the competitive industry while understanding the limit of their injury.

From a certain standpoint, the pairing was destined. AT&T's 'Death Star' (its logo for the uninitiated) has been returned to the Empire. I jest, but it will be interesting to see if the venerable brand will be retained or blown to smithereens.

While the merger - essentially remaking part of the Bell-AT&T system - is contrary to the vision of the competitive telecommunications market in the United States, it is being heralded by conservative thinktanks like the Competitive Enterprise Institute as proof of intermodal competition. "The increasing ability of consumers to substitute different modes - landline telephone, wireless, voice over IP - for another means and expanding marketplace that transcends the public utility model of the telecommunications industry. Network integration, such as we will see in a combined SBC/AT&T, is a requirement in order to compete effectively," says CEI's Technology Counsel Braden Cox in a statement.

Hmmm. I thought that's what the Telecom Act of 1996 was designed to do - create an environment where competitive service providers (and their innovative offers and market-based pricing) could flourish.

One thing CEI and I do agree on is this: "As we revisit the 1996 telecom act, there may be even more shakeups."

Certainly, MCI and Sprint are obvious targets for acquisition. Sprint, with it wireless property, seems the more attractive of the two. However, as I write this, the rumors are swelling about Qwest's bid for the MCI, whose forgiven debt load and next-gen network probably look fairly attractive to Qwest executives that have spent the last three years trying to right its ship. At the Qwest Business Partner Program event in January, company execs hinted that the ILEC might be ready to go shopping, but I never expected a purchase of this magnitude.

If, or should I say when, MCI and Sprint are gobbled up by RBOCs or cablecos, who will carry the flag for competitors?

There are no obvious deep-pocketed entities to fill the void. So, the rally of the small and nimble must begin again in earnest at the regulatory and innovation levels.

KHALI HENDERSON

khenderson@vpico.com
Group Editor