Comments on: BellSouth Walks Alone

By: John Beale

John Beale — Sat, 05 Nov 2005 13:17:59 +0000

Hmmmmmm……I think there’s a good chance of this, or something similar. First, physical infrastructure is expensive and challenging to build, so the current players have a decided advantage in holding the existing infrastructure. So, we won’t see many upstarts. Secondly, the cell industry is consolidating. If consolidation continues, the big dogs will accrue more and more of the physical network. The demand for national access will prevent the physical networks from segmenting once they are consolidated. (Though an individual company might split apart, I suspect that the physical network will remain together.) Thus, I think it likely that one or two companies will own the entire physical infrastructure used by service providers.

By: Stephanie_B

Stephanie_B — Sat, 05 Nov 2005 13:17:30 +0000

By: moo

moo — Wed, 02 Nov 2005 07:21:42 +0000

Om, how do you say SBC-AT&T will have revenues of $110 billion? SBC’s revenue is about $42 billion and AT&T’s declining annual revenue is about $28 billion.

By: Jake

Jake — Tue, 01 Nov 2005 23:52:42 +0000

You highlight the value that Cingular can bring.

With SBC and Cingular both choosing the same IMS platform, it seems possible that they are designing for a combined future.

All of Sextel may not be as interesting as part of Cingular, but maybe it is.

By: Scott Berry

Scott Berry — Tue, 01 Nov 2005 23:25:41 +0000

Seems to me that the reason BellSouth has better performance (higher margins) is that they currently face less competition, on average, in their markets. That region thus becomes a great big target for SBC (AT&T) and Verizon. Expect those margins to fall sharply in coming years.

Wireless is the remaining growth market, don’t expect BellSouth to part with Cingular anytime soon. (Triple play is not a growth market, it’s a replacement market for consumer wireline voice.)

By: Jesse Kopelman

Jesse Kopelman — Tue, 01 Nov 2005 19:22:40 +0000

I think BLS proves it is possible to be a regional player and still have good economies of scale (actually Comcast proves this too). I don’t see why they necessarily need to do anything to go national. National reach is important only in mobility, and they already get this from Cingular. Now, selling out the Cingular stake to SBC and becoming a MVNO would make good sense . . .

By: Stephanie_B

Stephanie_B — Tue, 01 Nov 2005 18:29:05 +0000

As I was considering these developments, I got to thinking. Sprint’s network is used by Virgin Mobile USA, Disney, and Qwest already. AT&T will probably go with Cingular. I’ll bet there are lots of other wholesaling relationships out there. Given that physical infrastructure is a bitch to build out and maintain, I wonder if more and more cell service providers will choose to operate on someone else’s network. Assuming they do, will we wind up with one or two cell networks used by all service providers and thus all cell users?

By: Jacob Varghese

Jacob Varghese — Tue, 01 Nov 2005 16:52:30 +0000

Maybe when Cingular is a separate entity, Deutsche Telecom will make a move at it. Makes sense for them.

By: Jacob Varghese

Jacob Varghese — Tue, 01 Nov 2005 16:51:26 +0000

Jake, Considering that Cingular makes up 40% of their bottom line, why would you think they would want to get out of that business?

They should spin off Cingular as a separate entity to really capitalize on it and limit any possible conflicts between sbc and bell south.
That’s my prediction.

By: Om Malik

Om Malik — Tue, 01 Nov 2005 16:13:08 +0000

whatever it is that he is going to do, it should not be boring. don’t you think?

By: Jake

Jake — Tue, 01 Nov 2005 16:08:25 +0000

Sell Cingular stake to AT&T/SBC
Buy Sprint (Sextel, LD, and IP)

Be really bold, add Vonage as well

By: Jacob Varghese

Jacob Varghese — Tue, 01 Nov 2005 15:49:06 +0000

I thought this was a great idea (from the USA today piece) from Ackerman
“merge the assets of BellSouth and SBC to create three separately traded companies — a traditional phone company, representing the local and long-distance assets; a wireless business; and Yellow Pages”

He wants to make the right moves not just any move.