This story appeared on Network World Fusion at www.nwfusion.com/nw200/200mixingc.html

Sector by sector: Carriers While all the circuit-switched carriers were doing the public packet prance last year (see our report on the enterprise infrastructure market), they were really preoccupied with their metropolitan network stories. AT&T made the biggest waves with its acquisitions of Teleport (the $11 billion deal completed in July), and TCI (the $48 billion deal approved in February). AT&T finished the year with revenue up 3% to $53 billion and profits of $6.4 billion. Now comes the hard part: integrating the resources and upgrading the cable TV plant. MCI WorldCom, of course, has a multifaceted local presence. MCI was already building metropolitan networks when it merged with WorldCom, and WorldCom already owned MFS, a facilities-based CLEC, and Brooks Fiber, another CLEC. In fact, local voice is MCI WorldCom's single fastest growing business in terms of revenue, growing 80% last year to $358 million. By comparison, long-distance voice sales were up 9% last year to $19 billion; long-haul data was up 28% to $5.8 billion; Internet revenue was up 69% to $2.2 billion; and revenue from international services was up 56% to $1.1 billion. The company closed the year with total revenue up 15% to $30.4 billion and profits of $1 billion. Like all the other companies growing through acquisition, these profits are artificially depressed by extraordinary charges. An interesting side note: Despite the fact that AT&T generates $20 billion more revenue than MCI WorldCom, the stock market puts a higher value on the folks from Mississippi. Last month, MCI WorldCom's market capitalization was $152 billion vs. AT&T's $148 billion. That will give MCI WorldCom President and CEO Bernard Ebbers more ammunition for his acquisition gun. Sprint, of course, has had a strong local presence ever since it merged with local carrier Centel in 1993. It was not until last year, however, that Sprint's local arm started selling the complete Sprint portfolio of products and services. Sprint's local telco revenue reached $5.33 billion last year, one-third of the company's $16 billion in sales. (Sprint's PCS wireless group is accounted for separately, has its own stock and shows up separately on the NW200 list. In comparison, PCS brought $1.23 billion in the door and lost $2.4 million.) Oddly enough, Qwest, the fast growing company whose vision of an integrated packet future set the industry on its ear last year, is thumbing its nose at facilities-based metropolitan networks, favoring instead to pursue deals with the RBOCs. To date, those efforts have run afoul of regulatory restrictions, although the investment by BellSouth could prove interesting. The biggest news on the RBOC front last year was just more of the same: megamergers. After swallowing NYNEX in 1997, Bell Atlantic in July moved to scoop up GTE in a stock deal valued at $53 billion (the merger is still pending). And after buying Pacific Telesis, last year SBC moved to acquire Ameritech for $62 billion, another deal that is still pending. While there were eight major regional telco companies a few years ago - seven Bell holding companies and GTE - ultimately only four will remain. Four big ones, at that. Combining a $31 billion Bell Atlantic with a $25 billion GTE will create a company that rivals the size of $53 billion AT&T. The newly wed SBC and Ameritech should weigh in with revenue of around $45 billion. The stakes are changing dramatically. All contents of Network World Fusion are copyright 1995-1999 by Network World, Inc., Framingham, MA, 01701.