Ma Bell's Big Buy
IF only Marconi could see it now.
The revolution in wireless communications he touched off led this week to the largest buyout in the history of the US telecommunications industry.
In announcing the $12.6 billion purchase of McCaw Cellular Communications Company, AT&T, the nation's largest long-distance carrier, has positioned itself to move into the rapidly expanding world of wireless personal communications services: cellular phones, hand-held computers, pagers, mobile facsimile machines, and other equipment that use the airwaves rather than phone lines.
The buyout also illustrates the pace at which technological advances are racing ahead of the regulatory decisions designed to govern the industry.
When the federal courts ended AT&T's monopoly in 1984, it left long-distance service and equipment manufacturing with the parent company and gave control of local phone service to the regional "Baby Bells." As cellular service has grown, the Baby Bells have enjoyed added revenue from access charges and phone-line leases to cellular companies and long-distance phone services, such as Sprint, MCI, and AT&T.
The Baby Bells are concerned, however, that AT&T's purchase could eventually edge it back into providing local service. If the federal government clears AT&T's purchase, which would take a year to complete, the Baby Bells in areas served by McCaw Cellular could see some revenue evaporate over time if AT&T even threatens to bypass the local phone companies by tying cellular sites directly to its own switching centers.
The issue of whether the sale violates the 1984 antitrust agreement is something the Justice Department undoubtedly will examine.
Rather than fight the sale, which also needs the Federal Communications Commission's approval, the Baby Bells plan to ask Congress to be allowed to enter the long-distance and equipment manufacturing business. If they do, lawmakers should give them a sympathetic hearing. If the sale eventually forces the Baby Bells into competition with AT&T locally, they should be permitted to challenge AT&T on its turf as well.
The result could lead to more competitive services and pricing, as well as to truly nationwide cellular systems - a wireless "alternate route" for the information superhighway.