SBC and AT&T Clear California Regulators and Close the Acquisition to Create 'The New AT&T'

On November 18th SBC Communications closed its acquisition of AT&T following the approval of the transaction by California's state regulators. The largest interexchange carrier and second-largest incumbent local carrier will immediately start integration, merging their networks, service portfolios, customer care teams, and overall operations. The combined entity, which will use the AT&T brand name, has a local-to-global reach, with a vast collection of wireline and wireless voice, data, and Internet resources.

Recommended Competitive Responses

► Verizon and MCI should use the completion of the SBC acquisition of AT&T to cite that it is only a matter of time until they will receive their final state regulatory clearances.

► Qwest and other carriers can point out that despite their best intentions, there's no such thing as a multi-billion dollar acquisition that goes smoothly. These carriers can present themselves as stable alternatives, either as a primary carrier or as the preferred secondary backup pipe option.

► CLECs and other competitors targeting smaller customers can describe "The New AT&T" as bigger, more Byzantine, and more impersonal than ever. They should contrast themselves as carriers that are focused on providing quality services with a personal touch, and that smaller customers are never lost in the cracks because they are the carrier's targeted market space.

► All fiber-based providers should keep an eye out for the bids to lease access fiber from the combined AT&T and SBC. Though an exact building count was not specified, the U.S. Department of Justice cited “more than 350” buildings where SBC and AT&T were the only options, and required carrier options to remain diversified.

► Cable TV providers need to have their dialtone voice services up and running, and should have residential and small business campaigns going to target AT&T (and soon MCI) customers that aren't interested in being brought into the SBC (and soon Verizon) fold.

► International competitors should make hay out of the fact that "The New AT&T" is based in San Antonio, Texas, not New York City. They can cite this as "proof" that hidden inside the new AT&T logo is SBC Communications, a Texas-based local carrier that doesn't care about or understand global markets..

Recommended End User/Customer Responses

► Most AT&T and/or SBC enterprise customers could not extricate themselves easily from the contracts they're in. The best strategy for concerned enterprises is to make sure there's a backup carrier in place for mission-critical services, pay a little extra in return for short renewals on carrier contracts, and take a wait and see approach on whether “The New AT&T” is a graceful transition or not.

► Residential AT&T customers inside SBC's territory stand to benefit in the short term from SBC's acquisition of AT&T. As SBC re-acquires their dialtone services, consumers will receive access to more, and more tightly coupled, bundled services choices than they would have had available to them under the AT&T brand.

► Consumers and smaller business customers that don't want to do business with their incumbent local provider may do best to check with their cable TV provider in terms of business services. The major cable TV providers have launched voice services in many metro markets, and though the availability of business voice services is still mixed, cable TV providers in general present a potentially more stable long-term choice than CLECs.

AOL and Warner Bros. will Soon Launch In2TV for Free Web Access to Old TV Shows

On November 14th America Online and Warner Bros. Domestic Cable Distribution announced that AOL will launch In2TV early next year, which will give consumers access to full-length episodes of TV series from the past streamed on the AOL Web site for free

The new service will also provide interactive games, quizzes, and polls related to the TV programs. In2TV will be organized into six channel categories: LOL TV, Dramarama TV, Toontopia TV, Heroes and Horrors TV, Rush TV, and Vintage TV. AOL’s advertisers will have new opportunities to use in-stream video broadband advertising, sponsorships, and ad banners.

Recommended Competitive Responses

► MSN and Yahoo! need to find content creators that are looking for an online medium to have their content distributed to a wide audience of broadband users. AOL’s new In2TV service will not go live for at least a couple months, which gives the other popular Web portals time to develop their own broadband video networks.

► Cable and satellite TV companies should stress the value provided to customers through access to the latest popular TV programming plus sports, news, and movies available in digital and high definition formats, and with the time shifting features of VoD and DVR.

► OL is taking a small step at making its Web portal into a TV experience when consumers have far more options with TV service than a broadband video network through a PC.
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Recommended End User/Customer Responses

► Consumers who are fans of TV shows of the past should check out AOL’s In2TV service when it launches early next year because the service is offered to any broadband user through AOL.com and doesn’t require any additional fees to watch only a few commercials per episode. Plus, the new service will have games, trivia, and search tools to guide a user through its network of classic TV shows.

► Paying BYOA AOL Broadband customers should reevaluate paying $14.95 a month for exclusive Web content when many of AOL’s newest services like In2TV are being offered to the general Web surfing public for no extra cost.

BellSouth Stays in the Bigger is Better Bandwidth Game with 6 Mbps DSL Upgrade

On November 16th BellSouth announced a new high-speed Internet service that offers twice the download speed of its current fastest service. BellSouth FastAccess DSL Internet service delivers residential customers downstream connection speeds of up to 6 Mbps and upstream connection speeds up to 512 kbps.FastAccess DSL Xtreme 6.0, which will be offered to residential customers for $46.95 per month, will provide customers with a fourth FastAccess DSL service option.

Recommended Competitive Responses

► Competitors can point out that BellSouth’s FastAccess DSL Xtreme 6.0 is fast - so fast that it’s difficult to provision, and not even fully available across the RBOC’s territory.

► Competitors can also point out although BellSouth is using ADSL for its FastAccess DSL Xtreme 6.0, it’s still a substantially faster variant than the more time-tested 3 Mbps downstream residential flavor commonly offered by other RBOCs, and so may still be prone to some bugs in the system.

► Time Warner Cable can state that while BellSouth’s FastAccess DSL Xtreme 6.0 offers the most bandwidth for the lowest price around, Time Warner Cable and Comcast can up the broadband ante to 8 Mbps download speed. True, the cost is a little higher, but BellSouth is not the fastest game in town for the residential user.

► BellSouth’s consumer broadband competitors should highlight their own value-added services and content partnerships to highlight how their services provide consumers with a greater experience and links to popular online video and music content.

Recommended End User/Customer Responses

► BellSouth customers in need of extra capacity should definitely check out BellSouth’s high-end DSL service, but first need to make sure it’s available to them. If not, demand a firm timeline as to when BellSouth expects to bring service online to that customer’s local loop.

► Customers should keep in mind that although BellSouth’s offer of 6 Mbps/512 kbps for $46.95 a month is mighty tempting, it is - like most DSL services - a best effort offer, and so not a measure of guaranteed performance.

► Customers should evaluate their own broadband needs, understanding just how much bandwidth their applications require. Many (if not most) users will probably find the bulk of their surfing can be done with 3 Mbps or less downstream rates, and not want to pay the higher rate for bandwidth they don’t really need.

► Customers that want lots of residential services (voice, wireless, data, and video) are probably best off choosing BellSouth, but they'll need to choose a premium voice package to get the best discounts. DSL may now be sold at a flat rate across the board, but if a customer buys wireless and satellite TV service from BellSouth, they can save up to $10 a month on each service and up to $125 in cash-back incentives.

Check Point Targets Service Providers with Safe@Office 500

On November 28th Check Point Software Technologies Ltd. announced the new Check Point Safe@Office 500 and Safe@Office 500W unified threat management (UTM) security appliances, offering small businesses network protection against dynamic zero-hour Internet attacks in a single, easy-to-deploy, and affordable solution.

Recommended Competitive Responses

► UTM vendors in the SMB space need to provide customers with firewall performance data, including throughput and latency, to dim Check Point’s best-of-breed technology claims.

► UTM vendors need to outline their MSSP capabilities, specifically illustrating granular management capabilities, including the ability to provide varying degrees of service to SMB customers easily.

► UTM vendors need to point out to customers that they were early to market with key technologies, such as anti-spam capabilities, to provide the broadest security protection to the SMB space.
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Recommended End User/Customer Responses

► Check Point/SofaWare customers should feel reassured that their investments are being protected and they should seek significant renewal discounts based on the company’s new pricing structure.

► Customers should conduct a cost/performance comparison of this all-in-one appliance in relation to other SMB offerings currently available. Customers needing to outsource network management functionality should factor in the cost of these services.

► Customers should look to Check Point for a road map for the Safe@Office 500 product.

► Service providers should look at ease-of-use, quick installation, and support factors as they compare this solution as an option for their end user clients.

Texas Telecom Reform Hands Licensing Shortcuts to SBC and Verizon IPTV Plans

The state of Texas has signed Senate Bill 5, the Telecommunications Reform Act, into law. The Act cites that "significant technology changes" have occurred since Texas passed its last Public Utilities Regulatory Act a decade ago. The overhaul goes into great detail governing regulations for broadband over power lines (BPL), should electric utilities choose to provide these services.

Among other changes, the Act also clears the way to deregulate all incumbent local exchange carriers (ILECs), redefining them as "transitioning companies" that can qualify as non-dominant carriers in major markets that present at least token local competition.

But most important, the Act aims to bypass the traditional local video franchise system, establishing a way for the RBOCs to receive statewide video franchises.

The Texas Telecommunications Reform Act could not have represented the interests of the RBOCs better if they had written it themselves.

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