Three Decades of Telecom 'Progress'?

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Thirty years ago this week — in the midst of that year’s Consumer Electronics Show — the U.S. District Court broke up the old Bell System in an antitrust ruling that has triggered overwhelming and ongoing repercussions throughout American society.

In recent decades, through the revistiture of the old monopoly into a lopsided oligopoly, the implications of that hoary decision have continued to affect the convergence/emergence of numerous ventures, notably wireless systems.

More words have been written about the Baby Bells and their fate than the amount of dollars that Verizon would have generated from last week’s ill-conceived and quickly dumped $2 billing fee. Indeed that fiasco was another reminder of the ways in which telcos are still trying to calculate and abuse their powers in a changing ecosystem. That’s not exactly “progress” as envisioned in 1982.

The power of the surviving telcos — now fully refashioned as “communications” megaliths, in the same way that Comcast, Cox and other MSOs have adopted “communications” for their corporate monikers — survives and continues to molt into new realms.

I’ve always been particularly intrigued by the gentlemen’s agreement between AT&T and Verizon to stay out of each other’s territory, although that separation expired with the rise of mobile communications. AT&T’s failed T-Mobile takeover and its just-approved $1.93 billion purchase of Qualcomm’s spectrum are further reminders that the surviving legacy telcos will duke it out on several battlefields - with cable, satellite and other industries inevitably affected by the deal-making they’ll take on. Verizon’s recent spectrum deal with MSOs further affirms that inevitable airwaves fight.

Meanwhile, one of my own pet theories is that Verizon will launch another terrestrial incursion into AT&T’s territory, probably via the purchase of a small MSO or some strategically placed independent cable companies deep inside communities where AT&T is the dominant telco. Verizon already has big footprints in Texas, California, Florida and other regions thanks to its 2000 acquisition of GTE (actually the old Bell Atlantic bought GTE and created the Verizon name for the combined companies).

Although my regulation-savvy friends and their Wall Street allies reject my speculation about the Verizon infiltration agenda, I continue to see unspecified value in such a deal - and not just for “in-your-face” bravura. Verizon’s new CEO Lowell McAdam, who came up via the wireless side, told an investment conference last month that the company will focus on account-based pricing for multiple devices and is working on a “more unified vision of video” delivered via tablets. Given the inevitability of social TV, that seems to include integration with online broadband video.

In other words, look for more competitive services that will benefit from a stronger total footprint.

At that 1982 CES — laden with the latest videocassette recorder and car stereo “breakthroughs” plus a dollop of videodisc technology — no one was thinking about the devices and streaming services that would eventually evolve from the old AT&T break-up. (I personally expected something big, but wasn’t quite sure what it would be; I was just grateful that the ruling, which was handed down on my birthday, became the most generous gift I ever received, leading to ongoing research and analyses projects that continued for decades.)

We’re still seeing the implications of that all-but-forgotten “modified final judgment,” although not all of what we’ve seen can truly be deemed “progress.”

Gary Arlen is president of Arlen Communications LLC in Bethesda, Md., and a long-time interactive TV enthusiast. Reach him at GArlen@ArlenCom.com

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