By Dr. Philip Baczewski, Director of  Academic Computing and User Services

Ma! You're Back!

With the recent announcement that the newly reconstituted AT&T was planning to buy BellSouth, it's as if the old Ma Bell has been brought back to life. This is quite an achievement, considering that AT&T itself was near death, with it's wireless division sold off, it famous Bell Labs spun off under the auspices of Lucent Technologies, and its long distance services still competing with Sprint, MCI, and a host of others including Internet newcomers, Vonage and Skype. It took SBC (formerly Southwestern Bell) to buy AT&T's remains and adopt its brand so that life would once again come to the company that in older times we called Ma Bell.  

Ancient History

Most college freshman will not remember Ma Bell.  In these days of ubiquitous telephony and multiple service options, it's hard to remember that at one time, AT&T was THE phone company, with only a few exceptions.  GTE, now Verizon, was one of the few large local phone companies that was not part of the Bell system.  AT&T was the only long distance carrier.  It served all of the regional local-service companies most of which were associated with AT&T under the umbrella of the Bell System. It took a 1974 lawsuit based on anti-trust allegations to split up the Bell System into AT&T, the long distance and technology company, along with the "Baby Bells" or "Regional Bell operating Companies" (RBOCs) as they were known.  The lawsuit was settled in 1984 and the Bell system was officially sundered in 1986.  This enabled little startups like MCI and Sprint to compete in the long distance market and gain access to RBOCs, access that was previously denied or made prohibitively expensive by AT&T.

Southwestern Bell was originally one of those RBOCs, but in the increasingly lax regulatory environment of the last 10 years, they managed to create a holding company called SBC and accumulate a number of the RBOCs, other holding companies, and local exchange carriers under their ownership.  When SBC recently purchased AT&T, they decided to adopt the AT&T brand. The purchase of BellSouth would add two more RBOCs to that list and once again give AT&T control over local service for a large portion of the U.S. along with a long distance company and a youngster in the form of the Cingular wireless service.  It's as if the Baby Bells have grown up, gone to college, and have now moved back in with their parents.

You've Redecorated

As in real life, it's never quite the same if you do go home again. The telecommunication landscape has changed quite a bit since 1986 and the biggest change is the development of the Internet. Local service now has to compete with cell phone service, and in addition to the myriad of long distance choices, you now have VOIP services like Vonage and Skype providing competition. Phone companies are now offering broadband Internet and television services and cable TV companies are offering phone service.

One of the changes brought about by the 1986 breakup of the Bell System was that local phone competition came into play for the RBOCs.  Companies like Verizon don't have to allow competition for local service, but as part of the settlement, RBOCs must allow access to their local lines for local service and long distance competitors.  It's unlikely that the reconstitution of Ma Bell would change that requirement.  There seems to be more concern about the lack of competition in the local broadband service market.  Right now, it seems that most people's only choices are DSL from their phone company or "cable modem" service from their cable TV company.

Broadband Options

It's a bit of a secret that there is competition for local DSL service.  One option is a company called Speakeasy which can provide DSL service in some locations even if you don't have local phone service.  Another broadband option is EVDO (Evolution Version Data Only) which uses a cellular network to provide data access.  Local municipal wireless networks also provide competition with broadband service companies which is probably why those companies have backed legislative efforts in Texas and other places to outlaw such endeavors. So far, most of those legislative efforts have failed (the exception being Pennsylvania).

So, even if the kids do all move home, it appears that the competitive environment has changed enough that AT&T won't be able to build the monopoly position it held before the breakup.  Still, there is a lack of choices in broadband Internet access and that lack is keeping prices high for home users.  Hopefully, new technologies like EVDO and the increasing availability of cellular service will help to bring more competition to the marketplace and therefore more access at a lower cost for broadband at home.

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