N.Y. Times News Service
WASHINGTON _ Few companies may be more threatened by American
Telephone and Telegraph Co.'s $12.6 billion pact to buy the
nation's biggest cellular carrier than the seven regional Baby
Bell telephone companies.
But just when it might be worth putting up a united front, the
Bells, including Southwestern Bell Telephone serving Oklahoma,
are deeply split over how to respond _ and in some cases seem to
be working at cross-purposes.
They also disagree on technical issues, and that could make it
hard for them to match AT T on advanced new services.
AT T's pending takeover of McCaw Cellular Communications Inc.,
announced last week, would effectively create a nationwide
wireless network that provides formidable new competition to
existing cellular operators.
The seven Bells, which rank among the nation's 10 biggest
cellular companies, have the most to lose. Down the road, the
combination of AT T and McCaw could use wireless technology to
make deep inroads into the Bells' basic local telephone
Industry executives say Bell Atlantic Corp. is trying to forge
a nationwide consortium for advanced wireless services and may be
close to an alliance with BellSouth Corp. and many independent
People familiar with the effort say Bell Atlantic hopes the
consortium will bid on new radio licenses for "personal
communication services," a sector that ranges from pocket
telephones, advanced paging and data communications to hand-held
The Federal Communications Commission hopes to auction the new
frequencies some time next year, and the new services are
expected both to complement and compete with cellular
Yet most of the Bell companies seem either indifferent or
hostile to the idea of allying against their former parent.
Indeed, several of them seem bent on raiding one another's
territories in search of new wireless customers.
"It's been our position for several years that the biggest
enemies of the regional Bell companies are going to be the
regional Bell companies," said Berge Ayvazian, a
telecommunications analyst at the Yankee Group, a Boston-based
market research firm. "Telephone operators have more of a common
interest with local cable television operators than they do with
Executives at some Bell companies say they are too constrained
by legal restrictions to enter a tightly knit nationwide
alliance. Others are chasing separate deals with cable television
companies, which also hope to provide personal communications
These new services are expected to compete against traditional
cellular phones, but will potentially offer much greater
potential in sending images and data over the air waves.
Finally, some of the Bells have been snapping up cellular
businesses and related businesses in one another's territories
and have become poised to compete head to head with one another.
That could be dangerous for the Bells and for GTE, the large
independent telephone holding company that is comparable in size
to a Bell and is also one of the top 10 cellular companies.
Phone companies face two major threats from a merger of AT T
and McCaw, which owns cellular systems that cover 35 percent of
the nation's population.
The first threat is to the cellular market share of the Bells
and GTE. The combined force of AT T and McCaw would present a
unified rival with the deep pockets and geographic reach to roll
out advanced wireless services with military precision across the
Over the longer term, if wireless phones begin to replace many
traditional wired telephone lines, AT T could eventually reach
its customers without paying billions of dollars in access
charges to local telephone companies. That would deprive the
Bells and GTE of their biggest and most profitable source of
money, a potentially crippling blow. …