November 18, 2005 2:14 PM PST
SBC closes AT&T acquisition
The new company, which will keep the AT&T name, received final regulatory approval from the state of California on Friday.
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.
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