By James R. Hood
ConsumerAffairs.com
October 27, 2005
SBC has decided to keep the name AT&T after it completes its acquisition of the long-distance company. In fact, SBC will go farther than that -- it will rename itself and most of its products under the 120-year-old brand.
SBC initially had planned to continue using its own name but top executives were finally persuaded that its brand is little known outside the 13 states where it provides local phone service.
The Justice Department and Federal Communications Commission are expected to give final approval to the $16 billion deal shortly.
"The AT&T name has a proud and storied heritage, as well as unparalleled recognition around the globe among both businesses and consumers," said SBC CEO Edward E. Whitacre Jr. Among AT&T's assets is a large base of business customers, who marketers feared would have been lukewarm to the SBC name.
AT&T, once known as American Telephone & Telegraph, grew out of the 1876 invention of the telephone by Alexander Graham Bell. SBC, once known as Southwestern Bell Corp., was created by the 1984 breakup of AT&T's national telephone monopoly.
After the AT&T breakup, much of the consumer press adopted the moniker "Baby Bells" to describe SBC and the other local operating companies. In fact, it was those local operating companies that were left with the most valuable asset -- local lines reaching virtually every home in the country -- while AT&T was one of a growing pack of long-distance providers with no direct lifeline to its customers.
Long-distance is an artifical creation. Most of the heavy lifting in a long-distance call occurs at the origination and destination points, with the "interexchange carrier" becoming almost superfluous as the local operating companies expanded their networks and handed off calls directly to each other.
The long-distance business was highly profitable for a decade or so but the development of cell phones and Internet communications began nibbling away at long-distance calling on the one hand while on the other, the FCC finally allowed the local operating companies to get into the long-distance business. In most states, the Bells quickly grabbed more than half the long-distance traffic, at the expense of AT&T, MCI and Sprint.
At its peak, AT&T served more than 60 million customers and charged top-tier prices. Its base is now below 20 million and it has been forced to adopt pricing more in line with its competitors.
The transaction does not affect Cingular Wireless, a joint venture between SBC and BellSouth Corp. Cingular last year acquired AT&T Wireless, which by the time of its acquisition was an independent company no longer owned by AT&T.
Meanwhile, Verizon is preparing to close on its acquisition of MCI, a deal it pursued in rsponse to the SBC/AT&T transaction.
