AT&T and BellSouth: What’s the impact for business customers?

We ended our last newsletter with a promise to continue discussion of BellSouth’s business-grade DSL service and terms contracts for the small and midsize business market. We’re going to interrupt that discussion for one newsletter to discuss the planned AT&T and BellSouth merger.

Our primary concern – or maybe it’s just a question – about this merger is the impact that it will have on the audience of this newsletter: the enterprise/corporate user of telecommunications services. Most of the discussions in the popular press have focused on “triple-play” (and even “quadruple-play”) issues, plus wireless and residential services. The business services impact has been discussed only in passing.

We can see several possibilities for how this would (or would not) have a significant business impact. But one must start with a historical perspective. In 1984, voice was the dominant communications medium; a 56Kbps link was considered very “fast,” and the advent of T-1/E-1 for networking purposes was in its infancy. In the intervening 20-plus years, services based on data have become the dominant communications medium, and the prices for both voice services and data transport services have eroded to a point that they are nearing irrelevancy. As a result, service providers are looking to enhanced and managed services as areas that could provide a reasonable profit margin.

On the positive side, having fewer companies offering access could bring simplicity. Even though we’re past the most difficult years of having to ask who can interconnect with whom and how this is accomplished, it’s still an issue that must be dealt with. And even though the number of competitors is decreasing, we do not see a return to monopoly status.

That said, we’re still concerned about the possible decrease in competition. In particular, our first major concern here is a lack of pressure to provide innovative solutions, thereby slowing the progress of the past 20 years. Also, we’re concerned about what will happen – if anything – to pricing in the wake of lessened competition.

There are no quick and easy answers here. Rest assured that this is a topic that we will continue to discuss in the coming weeks, months and even years.

In the meantime, we want your input, and we want to share commentary that we have already collected (and are continuing to collect) from the analyst community. To that end, we have created a forum to discuss this and other issues at Webtorials. Please visit this forum to find out what our fellow analysts are saying and to add your comments from the end-user perspective. Of course, we’ll share some of these comments in future columns.

* Editor’s note: For ongoing coverage plus additional analysis and commentary of the AT&T/BellSouth deal, check out NetworkWorld.com.