November 18, 2005 2:14 PM PST

SBC closes AT&T acquisition

SBC Communications announced Friday that it has closed the books on its $16.9 billion acquisition of AT&T.

The new company, which will keep the AT&T name, received final regulatory approval from the state of California on Friday.

The Federal Communications Commission and the U.S Department of Justice gave their approval of the merger last month with only a few minor conditions.

The acquisition was announced in January and originally wasn't expected to close until early 2006.

The merger is a pivotal event in the history of the telecommunications market. Twenty-one years after federal regulators forced the old AT&T to split up, Ma Bell has come full circle.

After the split, AT&T became a long-distance phone company. Its local phone business was split among several Baby Bells, one of which eventually became SBC.

Now the two sides of the business have been reunited, but under a much different set of circumstances.

"This merger of SBC and AT&T, and the coming merger of Verizon with MCI, are big, big news in the telecom industry," said Jeff Kagan, a telecommunications industry analyst.

"We have watched the industry change over the last 10 to 15 years. In 1996, the Telecom Act spelled out the rules of competition between the local and long-distance telephone companies. The local companies have won that war and are acquiring the long-distance giants," Kagan said.

The past decade has seen tremendous change in the telecommunications industry, from a regulatory as well as a technology perspective.

The Telecommunications Act of 1996 and the ensuing regulatory battles that have followed have shaped the landscape for new competition in the telephone and high-speed Internet access markets.

The adoption of cell phones and the emergence of new technologies such as voice over Internet Protocol, have also had an impact on the industry. These changes caused commoditization of long-distance telephony and ultimately led to the market consolidation trend.

Through its subsidiaries and affiliates, AT&T is considered the largest telecommunications company in the United States. It boasts the largest number of DSL lines in the country and has the largest long-distance network.

With these assets, the company will continue to compete head-to-head with cable operators, not just in the telephony market but also in high-speed Internet access and TV.

"We are ready to meet the needs of a new generation of customers in a new era of communications and entertainment," Edward E. Whitacre Jr., chairman and CEO of AT&T, said in a statement.

"The combination of SBC and AT&T companies gives us the local, global and wireless network resources and the expertise to set the standard for delivering meaningful innovations and making the promise of integrated communications and entertainment a reality for consumers and businesses."

In separate news, Verizon Communications also received approval in California for its acquisition of MCI. The company expects to close the deal, valued at $8.6 billion, next month or early next year.

8 comments

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Everything old is new again
There's a mythological element to all this. AT&T the parent is devoured by its progeny and reborn as a shadow of its former self.

It took twenty years and untold billions to basically divide Ma Bell into two regional phone companies.

You couldn't make this stuff up.
Posted by Betty Roper (121 comments )
Reply Link Flag
haa ahaaahahahahah
I agree...full circle!
Posted by XxXBoodroXxX (4 comments )
Link Flag
So we broke up AT&T Orginally, and...
ended up with the new AT&T renamed as SBC. Yeah, makes sense to me. So what happens now?
Posted by R. U. Sirius (745 comments )
Reply Link Flag
no no no not SBC
SBC may have bought AT&T but SBC is changing its name TO AT&T
because they feel that name has a better BRAND RECOGNITION
then SBC.
Posted by dlmtechnology (20 comments )
Link Flag
Did They Save The Signage?
A few years ago when SBC bought Pacific Bell there was a flurry of activity as SBC went around taking down the PacBell signage from all their central offices and replacing them with SBC signage. This followed of course, the replacement of AT&T signage with PacBell signage. Let us pray that somewhere in the recesses of SBC/PacBell/AT&T storage facilities there remains the original signage.
Posted by Stating (869 comments )
Reply Link Flag
It's too bad....
... that SBC doesn't have a clue about the integrity and quality and
customer consciousness that were the hallmarks of the true AT&T.
Now they have a named shell, and the only thing they care about is
the bottom line. SBC= Screw Bell Customers.... and they did, and
they will continue to do so.
Posted by Earl Benser (4310 comments )
Reply Link Flag
SBC - Oh the horror
I recently moved to Texas, I used to have Vonage in Washington, I had a few complaints about it, but nothing too bad. I thought I would go back to the copper line, so I called SBC to have a phone installed. Day one, phone installed, cables lay all over my driveway. I called they said they would bury the cable, which they did about a week later. I tried to call someone on my phone, fast busy, I tried to call my new number from my cell phone, rang and rang and rang, but the physical phone did not. I called SBC on my cell phone, they told me they gave me a bad number. So I would have to change my number to another number...All of a sudden I have two phone bill one for each number each with installation charges, and a $400 phone bill. Long story short, I cancelled the SNC service, got Vonage back. SBC sent me a survey about how they could improve their already great customer service! The Gall! When I was disconnecting the phone, I told the customer service people they should look for new jobs because this company will not survive in it's current form. Bad service, high prices, rude customer service, and arrogance.
Posted by SolariPIcasso (9 comments )
Link Flag
The monopolist strikes back
More than 20 years ago AT&T was broken up. The long distance company retained the name and faced significant competition. Due to "natural monopoly" conditions in the local loop and poor regulation to compensate for this the baby bells essentially retained their monopoly power. Baby bells have been successful and levereging monopoly power over the local loop into an all-but monopoly over DSL and similar services. 20 years later the monopolists are cleaning up the field, acquiring successful long distance players, and hoping - perhaps - to extend their monoply power further. The lesson I take from this: Regulation in the local loop was insufficient and ineffective, better regulation is needed to bring the benefits of competition to the local loop, and downstream services such as DSL. Somehow the FCC has a very different take and amazingly, sees the fact that a local monopolist is adding long distance service to its vertical integrated set of services as a herald of competition!
Posted by (9 comments )
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