Analysts see small impact of SBC deal on companies

IDG News Service - WASHINGTON -- SBC Communications Inc.'s announcement Jan. 31 that it intends to acquire rival AT&T Corp. may not have an immediate effect on most enterprise customers, other than a reduction in the number of employees servicing their accounts.
Analysts and telecommunications industry executives say the deal will have little immediate impact on telecom prices because of stiff competition from other carriers that may also be looking at mergers.
While SBC executives have trumpeted the deal as giving their regional telecom company an international reach, some AT&T customers have expressed concern about the job cuts SBC has announced, said Richard Simons, chief operating officer at MBG, a telemanagement company that works with customers of both SBC and AT&T.
AT&T previously announced 12,500 layoffs in 2004, and SBC has announced that it plans more than 12,000 job cuts if the acquisition is approved. "AT&T has already lost an enormous amount of knowledge over time," Simons said.
But Simons expects price competition among the remaining regional Bell companies as they acquire traditional long-distance carriers like AT&T and compete out of their traditional regions.
Yosef Rabinowitz, managing director of TBRC Cost Recovery LLC, a telecom expense management firm, agrees that price competition should continue even after the SBC/AT&T deal. His company helps small and midsize businesses manage their telecom infrastructure.
"SBC's acquisition of AT&T will likely have zero effect on enterprise customers," Rabinowitz said by e-mail. "AT&T is already irrelevant in the marketplace. Their prices are just too high."
AT&T charged customers more than some regional telecom resellers because of its name, Rabinowitz added. "For a long time, AT&T's major selling point, at least to our clients, was effectively, 'Of course we charge more. We're AT&T. Can you really trust some fly-by-night carrier?'" he said. "A corporate purchasing manager whose job would be in jeopardy if the phones went down might have fallen for that a few years ago. But today, most people know that many other carriers provide an equal or higher level of service at much lower prices."
Beyond the SBC/AT&T deal, many telecom analysts expect more consolidation of the industry. Recent news reports say long-distance and Internet service provider MCI Inc. is in merger talks with Qwest Communications International Inc. and with Verizon Communications Inc.
The fixed-line assets of Sprint Corp. may also be an attractive purchase option for Verizon, Qwest or BellSouth Corp., some analysts say.
For enterprise customers, the AT&T acquisition signals a likely move toward fewer choices for telecom and IP services, with a handful of huge companies competing

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