AT&T To Phase Out Its Consumer Markets

AT&T, the company that pioneered the U.S. public telephone system, announced Thursday that it is hanging up on the nation's consumer-telephone markets. Although not unexpected--the firm had announced a few weeks ago that it would no longer market its consumer services in seven states--the suddenness of the announcement surprised the industry.

The services to be phased out include the company's long-distance and local offerings. The firm emphasized that it would continue to serve its existing consumer customers and that it would continue to promote its emerging VoIP CallVantage offerings. AT&T will also concentrate on its offerings to business, where it has a strong position.

"It was inevitable," said Pete Wilson, president and CEO of telephony consultancy Telwares Inc., in an interview. "Here's the dominant market-share guy and he's conceding the market." Wilson noted that market-share figures on the U.S. telephone front show AT&T with 30 percent of the consumer market.

"There's probably some strategy underpinning the swiftness of this decision," said Wilson. "The announcement may position the [consumer] business to make it more attractive to be acquired. That's my speculation."

The suddenness of the decision took many by surprise, because there were efforts to hold the line on the move--which will certainly push telephone bills higher--until after the November elections. Another nail in the AT&T consumer coffin surfaced this week, with press reports that the FCC was developing a plan that would enable the regional Bell operating companies (RBOCs) to raise access-fee rates by as much as 15 percent.