14 Feb SBC and AT&T merger expands global reach for Wisconsin businesses
With 50 million customers in 13 states, 60 percent ownership of Cingular Wireless and 5.1 million DSL Internet lines, SBC was hardly just another local phone company. To global-minded business customers, however, SBC was still a regional operator that lacked overseas punch.
That was the harsh reality confronting SBC before it was announced the company will acquire AT&T for $16 billion. If the purchase goes through, SBC will simultaneously become the biggest long-distance carrier and the largest provider of phone and data services to corporate America.
The acquisition of AT&T will open new doors to business customers in Wisconsin and throughout SBC’s territory. It also brings a research component—AT&T Labs—that should spur technology innovation in an industry that faces increasing global competition.
To be sure, SBC was no country phone company before the announced buyout. It was an industry leader in high-speed broadband, with a network covering 77 percent of its local customer locations. It had nationwide wireless coverage through Cingular, which had recently purchased AT&T Wireless. SBC also had 52 million access lines and deep local reach.
But SBC didn’t have AT&T’s global network capabilities. AT&T serves virtually every member of the Fortune 1000. Its network covers more than 50 countries and connects virtually every nation on earth. AT&T also has 26 advanced Internet Data Centers, including 13 outside the United States.
While SBC had tried to break into the corporate services market, even building operations in 30 metropolitan areas outside its 13-state core, the company had found it hard to win contracts from the nation’s largest corporations. SBC needed an overseas network—and it got a big one when it acquired AT&T.
The pickup means SBC can now offer voice and data services to customers around the world, and make those critical connections for businesses in the United States. For a Wisconsin business looking to sell more products in China or France, for example, the combination could create a more seamless communications network.
For SBC, the acquisition of AT&T also dramatically expands the company’s research and development capabilities. AT&T Labs has more than 5,600 patents, issued or pending, worldwide.
“(AT&T Labs) is clearly a powerful asset. I’d even say it’s a crown jewel in this industry,” said Randall Stephenson, SBC’s chief operating officer.
The tradition of AT&T Labs dates to 1925, when Bell Telephone Laboratories was created as a joint venture of AT&T and Western Electric. Quickly dubbed “Bell Labs,” this R&D operation was responsible for a range of breakthrough technologies, from telephone switches to the transistor and the photovoltaic cell.
Over time, the research conducted at Bell Labs helped to lay the theoretical foundation for modern telecommunications. After the 1984 court decision that broke up the old Bell System, Bellcore was split off from Bell Labs to provide R&D functions for the newly created local exchange carriers, which included SBC. In 1996, AT&T Labs spun off Bell Labs, along with most of its equipment manufacturing business, into a new company called Lucent Technologies. But it retained enough researchers to form AT&T Labs, which may now prove to be a formidable competitive edge for SBC.
Regulators and the marketplace itself will have the final word on whether SBC’s buyout of AT&T is the right move. However, in a world in which business and residential customers are demanding a range of communications options, the combined company may offer the right combination of service, price and innovation.
The opinions expressed herein or statements made in the above column are solely those of the author, & do not necessarily reflect the views of Wisconsin Technology Network, LLC. (WTN). WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed herein.