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September 1, 1998

2 Min Read
Stop the Music!

Posted: 09/1998

Stop the Music!

It used to be you could enjoy the Sunday paper with your coffee. If the headlines were
jaw-dropping, the worst that could happen was a little soggy newsprint with your eggs and
toast. Now, with 24-hour online news, it’s hazardous to health–yours or your
computer’s–what with the risk of electrocution, hard disk failure or a sticky keyboard.
And, so it went for many of us net surfers July 26 when AT&T Corp. and British
Telecommunications PLC (BT), the two top international carriers, announced their $10
billion global venture.

I should have seen it coming. Two giants dancing are hard to miss. On the simplest
level that’s what this pairing boils down to–size. A waltz with a company smaller in
stature is merely awkward with arms and eyes never finding an appropriate place to linger.

Certainly, their attraction to one another should not come as a surprise; by all
accounts, both are looking to shore up their international businesses. After the collapse
of its $24 billion proposed merger with MCI Communica-tions Corp. last year, BT was in
need of a replacement ally in the U.S. market, which is home to nearly half of the world’s
multinational corporations. For its part, AT&T is looking to close the gap between it
and competitors MCI and Sprint Communications Co., whose global partnerships outperformed
AT&T’s Unisource and WorldPartners alliances. In this new 50-50 arrangement, the only
questions left open are: "Who will lead?" and "What sacrifices will they
have to make to be together?"

Speaking of sacrifices, the $52 billion do-si-do between Bell Atlantic Corp. and GTE
Corp. certainly calls for some. The pairing, at press time, the latest in a series of
telecom mega-mergers, has regulators, competitors and consumers worried. This ain’t no
dollar dance, they say. It is expected that Bell Atlantic will have to open up its local
markets, and/or the companies will have to divest some of their assets (e.g. wireless
businesses) in order to secure regulatory approvals for the deal, which would create a
company controlling one-third of the local phone market.

Dance fever isn’t over, I’m afraid. Analysts say that the unpaired regional carriers
and long distance companies are now under increasing pressure to fill their dance cards.
Emerging carriers and strong foreign partners are likely to be courted. All I can say is
somebody, please, stop the music before there’s no room left for the light-footed
companies on the floor.

Khali Henderson
Editor-in-Chief

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