SBC's announcement Jan. 31 that it intends to acquire rival AT&T may not have an immediate effect on most enterprise customers, other than a reduction in the number of employees servicing their accounts.
Analysts and telecom industry executives say the deal will have little immediate impact on telecom prices because of stiff competition from other telecom 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 job cuts that SBC has announced, said Richard Simons, chief operating offer of 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 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 Bells as they acquire traditional long-distance carriers like AT&T and compete out of their traditional regions with the regional Bells.
Yosef Rabinowitz, managing director of TBRC Cost Recovery, agrees that price competition should continue even after the SBC/AT&T deal. TBRC Cost Recovery, a telecom expense management firm, helps small and mid-size 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 provider MCI is in merger talks with Qwest Communications International and with Verizon Communications. Most telecom analysts expect MCI to be the target of acquisition attempts from the three other regional Bells: Qwest, Verizon and BellSouth.
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