Earlier this fall, both AT&T and MCI announced billions of dollars in write-offs. They wrote down network equipment assets, indicating that much of their old line TDM gear was useless in an increasingly IP world. AT&T executives have been saying that for months now. Though many seem to think these write downs are signs that a firehouse sales is coming, others like me disagree. I think AT&T for one, can exist as a smaller, but more nimble company. As I like to argue – sure I want to be 6 feet two and 50 pounds lighter, but that’s not gonna happen. “These asset write downs should have been done years ago,” Allan Tumolillo, COO of Probe Financial Associates says, “allowing both companies to compete with less. IP networking and the services it enables create pricing pressure across the board – in voice, in transport, and in applications. That, and the relentless competitive challenge posed by the RBOCs, have forced both carriers’ hands.” I agree with Allan, and believe that even Baby Bells will be forced to do these large scale write downs, though not in next 12 months. Things have to get desperate for them. “The RBOCs operate two access companies – their landline and their wireless operations – and the combination of these assets generates far less revenue per dollar of net plant than either a pure wireless play like Nextel, or even a weakened long distance carrier like AT&T,” Allan adds. VoIP has brought a new reality to the telecom market, and sooner or later everyone needs to fall in line.
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