Big Wheels Keep on Turning

Posted: 05/2005

Big Wheels Keep on Turning

My brother-in-law asked me if there was anything new going on in the telecom market these days. I was attending his son’s third birthday party, so I realized he was just making conversation, but I couldn’t resist the retort: “Nothing unless you count the fact that SBC is buying AT&T and Verizon is trying to buy MCI.”

He looked at me quizzically. Why he had not heard about developments making headlines the world over is a subject for another editorial in another magazine. However, he was stunned nonetheless. Being a computer programmer, he understands the technological innovation of the last 20 years on an intimate level. His very job depends on its continuation. His opinion was that big companies getting bigger could not be good news, and he wanted me to tell him that there was someone trying to stop it from happening.

I think many of the people in the competitive industry also feel that way. Most are looking at the next guy or think tank or watchdog group or lobbyist to be the one to ensure “bad stuff ” doesn’t happen.

Without the time or energy to explain the politics of telecom regulation over chips and dip, the lazy cynic in me popped off: “It doesn’t matter what anyone says, it boils down to who has more money and access to power.”

I am not entirely convinced of this notion, but it does sometimes appear to be true.

The most anyone expects, I told him, was the mergers would be approved with conditions. What I did not tell him is those conditions are unlikely to be enforced as has been the habit with the FCC of late.

I also did not tell him these are unlikely to be the last of the megamergers in the telecom industry. Since MCI probably will go to Verizon, that leaves Qwest, BellSouth and Sprint. One of them is likely to be going home from the dance alone.

Dick Jalkut, CEO at Telepacific and a former president, CEO and chairman of NYNEX Telephone Companies, the regulated arm of NYNEX (now Verizon), told me he expected the market leaders in 2010 would be SBC, Verizon, Comcast, Cox Communications and Time Warner Cable. Not only is there no MCI or AT&T, but there is also no Sprint, Qwest or BellSouth in his scenario.

Jalkut could very well be right. Meanwhile, the wheels are in motion for the rest of the industry to begin maneuvering as best as they can to avoid being in the way of the massive “wheels of progress.”


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