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The post-divestiture AT&T boasted assets of $79.2 billion, annual revenues of $75.1 billion and a total workforce of 303,000. Table 15.3 provides a view of AT&T, both post-divestiture and post-spinoff.

Table 15.3 AT&T, post-divestiture and post-spinoff

At&T, Post-Divestiture At&T, Post-Spinoff

AT&T Communications Services (formerly AT&T Long Lines) AT&T Corp.
Role: Long Distance Service, Universal Card, AT&T McCaw Cellular (acquired 1994). Role: Long Distance, Universal Card, AT&T McCaw Cellular, Wireless, Internet Services, AT&T Laboratories. Revenues: $51 billion. Assets: $56 billion. Employees: 127,000
AT&T Bell Telephone Laboratories Lucent Technologies
Role: Research & Development Role: Research and manufacturing of CPE/DTE. Includes Bell Laboratories and AT&T Technologies. Revenues: $21 billion. Assets: $20 billion. Employees: 131.000.
AT&T Technologies (formerly Western Electric)
Role: Manufacturer of CPE/DTE
AT&T Global Information Solutions (formerly NCR Corp.) NCR Corp.
Role: Manufactures Computers, ATMs, Electronic Cash Registers Role: Data Processing Systems (no PCs), ATMs, and Electronic Cash Registers. Revenues: $8 billion. Assets: $5 billion. Employees: 38,000.

AT&T also announced in February 1996 announced its Internet access service. The installation charge is waived through the first year of the offering. AT&T long distance customers get the first five hours of usage for free, additional usage is priced at very competitive rates.

In January 1996, AT&T purchased a 2.5% stake ($137 million) in DirecTV, a provider of entertainment TV via DBS satellite. AT&T will market DirectTV to its customer base, billing for the monthly services through its standard long distance billing system. Purchase and installation of the dishes can be financed through AT&T credit cards. AT&T has an option to increase the stake to 30%, depending on the number of customers it delivers to DirecTV [15-24].

US West offered in February 1996 to acquire Continental Cablevision for a package that totals $10.8 billion. US West hopes that this will be more successful than its investment in Time Warner—the two companies are suing each other over Time Warner’s agreement to buy Turner Broadcasting [15-38].

SBC (Southwestern Bell) announced in April 1996 its intent to acquire Pacific Telesis (Pacific Bell and Nevada Bell) subject to approvals of stockholders and regulators. The combined size of the companies will make the new organization a real force in the market. SBC’s 1995 revenues were $12.7 billion and PacTel’s $9.0 billion; their subscriber base will total 25 million, including 7 of the top 10 largest metropolitan markets in the U.S. and 16 of the top 50.

Bell Atlantic announced in April 1996 that it will acquire NYNEX for $22.1 billion in stock, ranking as the second largest merger in U.S. history. The new Bell Atlantic will boast combined assets of $51 billion, making it the second largest phone company, behind AT&T (which is splitting up, of course). Combined revenues will be $26.9 billion from a customer base of 37 million in a service territory which stretches from Maine to North Carolina.

Repaving the Information Superhighway

Repaving the I-Way sometimes means repaving the flyway, referring to airwave technologies. (The author begs forgiveness for stretching the metaphor to the breaking point.) In any event, a number of companies are investing vast amounts of money to gain advantage on the I-Way. In fact, it seems as though each week brings announcements equivalent to the annual GDP(Gross Domestic Product) of a third-world nation.

Bell Atlantic and Pacific Telesis won federal court approvals in March 1995 to provide InterLATA video services, and via satellite, in competition with CATV providers. Such services previously had been prohibited under the terms of the MFJ. Bell Atlantic’s approval extends nationwide, while Pacific Telesis is authorized to provide services across LATAs, but only within its service areas. Bell Atlantic later delayed its plans to offer CATV service. The impact on this agreement of the SBC acquisition of PacTel remains to be seen.

Bell Atlantic and NYNEX invested $100 million in CAI Wireless Systems. The investment is toward the development of broadband wireless video transmission.

Ameritech intends to spend $4.4 billion over 15 years for a hybrid fiber/coax network. The first phase will pass 300,000 homes by the end of 1995, and 1.2 million homes by year-end 1996. Each year thereafter, 1 million homes will be added to the network until such time as 6 million homes are passed.

GTE Corp. intends to invest $220 million to provide video service to 500,000 homes in Thousand Oaks, California and St. Petersburg and Clearwater, Florida. An earlier trial planned for Manassas, Virginia was canceled.

PacTel announced in March 1995 its intentions to develop a $16 billion fiber/coax network to serve 1 million homes in 23 cities by the end of 1996. An additional $40 billion is targeted to extend that network to half of California by 2000, and to all of California by 2010. Much of the content is intended to be provided by Tele-TV, a joint venture of PacTel, NYNEX, and Bell Atlantic. Media Server software will be provided by Oracle, MediaStream video jukeboxes will be provided by Hewlett-Packard and orders have been issued for 4 million set-top boxes [15-39]. The initial trial in Milpitas, California was canceled after disputes with the municipal government over right-of-way and taxation of video networks and services. Similar disputes have arisen in San Jose, where only a few hundred homes have been connected, rather than the 200,000 PacBell hoped to connect by mid-year 1996 [15-40]. Again, we’ll have to wait to see if the SBC takeover of PacTel has any effect on this arrangement and these trials.

BellSouth plans to trial video services to 12,000 homes in Atlanta and other areas.


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