Family Feud II: The Telecommunications Industry

By Jon Auerbach The Boston Globe | THE JOURNAL RECORD, July 8, 1996 | Go to article overview

Family Feud II: The Telecommunications Industry


Jon Auerbach The Boston Globe, THE JOURNAL RECORD


Is it a case of ungrateful children turning cruelly against their loving mother, or has an evil mom abandoned her kids?

Either way, the venom flowing between Ma Bell and her seven "Baby Bells" is enough to make Cinderella's mother-daughter relationship seem like filial bliss.

The relationship between AT&T and the Baby Bells has been contentious ever since the Justice Department cast the seven regional Bell operating companies from the AT&T home in 1984. But in the five months since Congress cleared the way for a newly deregulated telecommunications world by passing a sweeping reform bill, the AT&T- Baby Bell animus has degenerated into a hate-fest, complete with rhetorical food fights, finger pointing and saber rattling.

Beneath the surface of this vitriolic posturing, however, is a high-stakes battle for a $160 billion market that will play a significant role in determining what the telecommunications landscape will look like well into the 21st century.

Perhaps most important, the outcome of the AT&T-Baby Bell rows will almost certainly determine what millions of Americans spend on their phone bills each month, as well as set the tone for the future competitiveness of the market.

The nub of the dispute is that the Baby Bells and AT&T each have what the other wants; in AT&T's case, it's a grip on the $70 billion long-distance market and a superior brand loyalty and national recognition.

For the Baby Bells, also known as the RBOCs, or regional Bell operating companies, the advantage lies in a sophisticated infrastructure of wire and equipment, plus hands-on repair teams and unrivaled experience and knowledge in running a local telephone business estimated at $90 billion.

AT&T has said it will offer local calling in all 50 states by 1997. The Baby Bells promise they'll be up and running with long- distance service by then.

But as they sit on the starting line waiting to invade each other's turf, things have gotten predictably ugly.

"At the end of the day, the fiercest competition on the company- by-company basis is AT&T vs. each and every one of the RBOCs," said Peter Pratt, a senior telecommunications analyst with the Business Research Group in Newton, Mass.

All players have their eyes on Aug. …

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