[News] AT&T-Teleport Deal Could Lead to More
MultiChannel News - VOLUME 19 • NUMBER 2 • JANUARY 12, 199
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Michael Armstrong, chairman and CEO of AT&T, said TCG "will become the foundation for a new unit with accountability for our local services."
Robert Annunziata, chairman and CEO of TCG, will become an executive of AT&T, reporting directly to Armstrong.
The TCG merger will immediately transform AT&T into a facilities-based carrier, thereby allowing it to circumvent an Eighth Circuit Court of Appeals ruling last year that benefited such entrants into the local loop, but that left the long-distance carriers out in the cold.
Analysts have been expecting a blockbuster announcement from AT&T, which has lagged behind its competitors in formulating a strategy for getting into the local loop.
The need for a strategy was given added impetus in November, when WorldCom Inc. announced that it was acquiring MCI Communications Corp. -- which was already in 25 local markets.
Analysts believe that the TCG deal, along with any agreements with TCI, will meet with little opposition from federal regulators, who are expected to approve the WorldCom/MCI deal.
AT&T, which still has the world's most recognized brand name, may be picking the ideal time to get back into the local loop.
The effects of the TCG deal on cable's future role in telephony depend on the current status of each cable operator.
Cox said it will "stay the course" in its drive to become a full-blown CLEC (competitive local-exchange carrier), while analysts said TCI and Comcast are more likely to act as distributors of AT&T local-exchange service.
"We're not all in lockstep," conceded Cox vice president of public affairs David Andersen. Andersen said the TCG deal will have little effect on Cox's plans.
Cox is already providing switched telephone service in its Orange County, Calif., and Omaha, Neb., markets, with plans to roll out service in its seven remaining major clusters, he said.
"What Teleport did for us was give us lines and switches in areas where we didn't have them," Andersen said. "It also gave us a nice return on our original investment of $207 million, which is now $2.4 billion."
One industry watcher, speaking on condition of anonymity, said Hindery was discouraging talk of future deals with AT&T because of TCI's history of not delivering on its promises.
"TCI has stepped on itself repeatedly by promising things that didn't come to fruition," he said. "Leo doesn't want to announce anything until the fat lady sings."
AT&T will use TCG to gain immediate access to the CAP's top 66 markets, 9,000-plus fiber route miles, 41 local switches, 5,000 connected buildings and 300,000 access lines of service, Armstrong said.
"Cable will expand AT&T's reach beyond TCG's commercial accounts to the residential markets," said one financial analyst, who asked not to be identified.
Meanwhile, one analyst asked what the TCG deal would do to the Sprint PCS partnership, which includes the same cable operators that controlled TCG. Most likely, he said, the partners are preparing to jettison that investment.
"You can kiss that partnership goodbye," he said. "They were suppose to market Sprint long-distance service. But Cox cut a deal to offer long distance in California with another carrier. That was the first sign of dissension in that partnership." |
