The New AT&T: Wireless At Its Heart

Launched at the New Year, the new AT&T will increasingly be a wireless communications company that also generates income from advertising and offers television and broadband data services as well.

In an announcement following the FCC's approval of its acquisition of BellSouth, AT&T indicated Cingular Wireless, previously jointly owned by AT&T and BellSouth, will be the heart of the new company.

"It [the merger] will strengthen Cingular through unified ownership and a single brand," said AT&T chairman and CEO Edward E. Whitacre Jr. "No partnership between two independent companies, no matter how well run, can match the speed, effectiveness, responsiveness, and efficiency of a solely owned company."

The new AT&T has its recent origins in SBC Communications (the old Southwestern Bell), and just as SBC took up the AT&T brand name, Cingular is expected to eventually carry the AT&T brand name, too.

The mobile phone operation will be in a better position to compete with Verizon Wireless, whose service is generally faster. Verizon has been adding customers at a faster rate than Cingular, which is the larger of the two wireless firms. Verizon Wireless must deal with its Vodafone partner, which owns a major piece of the wireless operation.In addition to giving the new AT&T the latitude to aggressively address the mobile phone business, the $86 billion acquisition will enable AT&T to compete more effectively with cable companies, which have been poaching on AT&T's traditional landline telephone network.

The acquisition includes a groundbreaking agreement calling for AT&T to sell broadband DSL as a separate service for $19.95 a month, without requiring customers to also buy telephone service.

Republican and Democrat commissioners at the FCC hailed the agreement because it will likely spur the spread of broadband across the United States, which has lagged behind several other nations in the deployment of broadband.

Praising the inexpensive DSL feature, FCC chairman Kevin Martin said, "While we would not impose these requirements as regulations, we are pleased that these conditions will further encourage the deployment and adoption of broadband by consumers."

Jonathan Adelstein, a Democrat commissioner, hailed the low price of DSL and noted that it will likely spur the use of VoIP telephone services.While the AT&T concessions—given at the last minute on Thursday in a package of concessions to obtain FCC approval of the merger—apply solely to AT&T, they could encourage other telecom companies to adopt similar consumer-friendly features.

A spokesman for public interest organization Public Knowledge said the AT&T features could represent a plan for other telecom firms to follow.

By itself, the acquisition promises to be a boon for the spread of broadband and video. "All consumers should expect to benefit from this [broadband] technology," said Martin. "The merging parties recognize this and continue to deploy high bandwidth broadband to consumers."