FCC OKs SBC-SNET Merger11/01/1998 7:00 PM Eastern
Following the approval of the merger between SBC
Communications Inc. and Southern New England Telecommunications Corp., the fate of the
Connecticut telephone company's cable-television operations remains uncertain.
Despite SBC's well-publicized dislike of video
services it quickly unloaded Pacific Bell's wireless cable operations after
acquiring its parent, Pacific Telesis Group, last year some analysts believe that
SNET's cable future may be more secure. And the cable operation's saving grace
may come from an unlikely source long-distance service.
SBC has been hot to enter long distance, but, like many of
its Baby Bell counterparts, it has been stymied by its inability to show regulators that
it has sufficiently opened their local markets to competition.
But by keeping the Connecticut cable system alive, SBC has
an example of its efforts to foster competition.
"Anything that shows that they are increasing the
levels of competition helps them in the InterLATA [local access and transport area]
long-distance market," said Michael Bowen, an analyst with BT Alex.Brown in
Baltimore. "They may not pour a ton of capital into it, but from a pro-competitive
standpoint, they can use [cable] as a leg to stand on for long-distance service."
David Yedwab, vice president of Eastern Management Group in
Parsippany, N.J., added that despite any regulatory advantages that the cable system might
bring, SBC's decision will come down to one thing: economics.
"SBC is a very pragmatic company," he said.
"If the business doesn't look like it will make money, they won't be in it,
unless they think that the political gain outweighs the potential loss."
The Federal Communications Commission approved SBC's
$4.4 billion acquisition of Hartford, Conn.-based SNET Oct. 23. SBC has until April to
evaluate SNET's cable operations.
SBC had agreed earlier to keep the cable system operating
for at least two years. However, the company now has the option to request modifications
to SNET's cable-franchise agreements with the state.
"Video is an important part of our offering
we're still in that business," said Selim Bingol, an SBC spokesman.
"We're in the business of making good decisions. If cable fits that, then it
will be a part of what we offer."
SNET's cable offering, which is overbuilding
Cablevision Systems Corp., has attracted about 21,000 subscribers in 13 Connecticut towns.
The company plans to expand to 20 cities by the end of the year.