SBC wastes another year on merger posturing

By David Rohde
Network World, 07/26/99

Almost 14 months ago, I wrote about a conversation I'd had with SBC regarding the company's just-announced proposal to buy Ameritech.

SBC was claiming that somehow it was necessary for the firm - already the most imposing telephone company in the land - to merge with Ameritech before Ameritech could commit resources to competing outside its region.

So I said: Great, you finally want to be a competitive local exchange carrier (CLEC). Tell us a little about your plans. What switches will you use? How many route-miles will you construct? Will you build all your facilities, lease some or just resell the other Bells' lines?

SBC couldn't answer any of these questions.

Recently SBC announced an agreement with the Federal Communications Commission to apply "conditions" to the Ameritech merger if the five commissioners OK the deal. Under the conditions, supposedly SBC will pay fines if it fails to enter 30 new markets as a CLEC.

So I figured it was time to call SBC and revisit these questions. (Just for fun, call up last year's column and compare this year's answers with the last set.) Here is the latest, remarkably unchanged line of questioning:

Q: Which vendors' switching and transmission equipment will you use?

A: We don't have the answer to that.

Q: How many route-miles will your new networks cover?

A: We're not saying anything about that yet.

Q. There are three methods of CLEC entry: Resell the incumbent's services, lease unbundled network elements or build all your own facilities. Which will you use?

A: All of the above, depending on the marketplace. There is not a single strategy that we've settled on.

So much for the past year. What's even more worrisome is what's going to happen over the next year. Under the unpublicized fine print of the merger conditions, SBC actually only has to enter three cities in the first year after merger approval. And the initial definition of "entering" a city is - get this - installing one switch and serving one customer.

SBC recently filed for official CLEC status in Massachusetts, Florida and Washington. That move matches SBC's announced intention to compete first in Boston, Miami and Seattle.

So I asked: Have you filed for CLEC status in any other states?

Answer: Not yet.

Here's a question for the FCC staff: When you negotiate deals with legacy carriers in exchange for approving questionable mergers, is it possible that these deals train the carriers to forget the market and just do the bare minimum that their lawyers tell them they have to do?