The Engadget Guide to AT&T Wireless/Cingular/SBC/AT&T merger mania
posted Feb 2nd 2005 2:37PM
Seems like pretty much every company with the letters "AT&T" somewhere in it has been the subject of an acquisition in the past few months. Since we can't be the only ones having trouble keeping everything straight, we thought we'd put together this handy guide with details on all the important dates, events, and players you'll need to know in order to understand what the hell is going on. Feel free to print out and carry in your wallet or keep taped to your wall for easy reference.
1984 - For years there was one phone company: AT&T. Then in 1984 the Justice Department forces AT&T to split up into a bunch of different companies. Seven of those become the regional Baby Bells (the regional Bell operating companies, or RBOCs), while what was left of AT&T handles long-distance.
The late 1990s - One of those regional local phone companies, Texas-based Southwestern Bell Corp, spends the late Nineties scooping up its fellow local phone companies, buying Pacific Telesis Group (PacBell) in 1997, Southern New England Telecommunications in 1998, and Ameritech in 1999. In 2002, SBC Communications, as it is now known, decides to ditch all the regional brand names and call the entire company simply "SBC" in order to "unify its image."
2000 - SBC combines their cellphone operation with that of BellSouth in a joint venture known as Cingular Wireless. SBC owns 60% of Cingular. BellSouth owns the other 40%.
2001 - As part of a restructuring plan, AT&T decides to spin off their wireless division, known as AT&T Wireless, as a separate company.
2004 - Cingular decides to acquire AT&T Wireless. Cost: $41 billion. AT&T, AT&T Wireless's former parent, retains rights to the AT&T Wireless brand name as part of 2001's spin-off agreement. They announce plans to launch a new wireless service under the AT&T Wireless brand name after Cingular completes its acquisition.
2005 - SBC, which you'll recall is an amalgam of regional Baby Bells spun off from AT&T, reaches an agreement to buy its former parent for $16 billion, $25 billion less than Cingular pays for AT&T Wireless. So SBC owns 60% of Cingular, which bought AT&T Wireless; assuming the Feds okay the deal, SBC will eventually own AT&T, too. Make sense?
Update: merger is approved in November, and SBC once again rebrands to AT&T. AT&T, which still has the rights to the AT&T Wireless name will begin using it in select markets, perhaps as a Cingular-based MVNO.
2006 - AT&T (formerly SBC) announces purchase of BellSouth for 67 billion dollars. Probably just to annoy us. We'll have to wait and see if the SEC approves.
In all the words of all the blogs past, no one mentioned The Western Electric Co. They did all the switch instalations in the central offices of most of the baby bells and att. They are now, along with Bell Labs, called Lucent Technologies
i have an at&t wireless plan and want to add a phone, but can't because I have to switch to a cingular plan- shuold i do that or wait for at&t to take over cingular- i need another phone and can't get one without switching to cingular
I want a new phone and I cannot order one because I have to sign up for a cingular plan! I don't like the new service because the new phones do not work up here in the Colorado mountains! What can I do?
I have tried switching 2X and could not even dial 911 on the new phones! I have asked for more minutes and they said I can't even get that without switching. Please help!
Ma Bell now longer./Giant and unstoppable,/She is now Mother.
SBC needs to sell the old Pacific Telesis Group to Qwest before they are allowed to acquire Bell South. This would make the regional maps much more symmetrical.
Wow. Totally not confusing at all.
Ma belle hasn't fully recovered from the 1984 breakup, but it has gained a lot of momentum. The Death Star (ATT) will now have 11 of the baby bells with only 13 to go. With ATT being forced to sell the Pacific Telesis Group, to Qwest, (Qworst, US Worst), this will only force consumers to go to the Death Star.
I guess its about time to update this article with the 2007 developments!
Yes, it definitely is. Who will add to the history? I can mention that, as everyone now knows, "Cingular's name is now AT&T." Most people are surprised when I tell them that Cingular bought AT&T (mainly for the subscribers and towers but also for the name). Everyone just assumes that AT&T bought the other companies. AT&T couldn't buy shoelaces when it was just an LD company.
Also, as for the GTE/United/Sprint tale, one of the interesting bits of the Southern Pacific Railroad/United Communications family was that phone companies used to run cable directly next to the railroad ties. One, the railroads already had permission and licenses allowing them to cross state lines. Two, it helped prevent digging and subsequent cable breaks. Pretty neat, huh?
BTW, in 1980 GTE bought a small data communications company called Telenet (an offshoot of ARPANet), the first public packet switched network, and renamed it GTE Telenet. In 1984, GTE Telenet and United's data network company were the glue of the new "US Sprint," and actually kept it in the black for several of the early years. GTE was quite surprised when United decided to buy them out in 1990. The former "GTE Telenet"/"Telenet, a US Sprint Company," then became Sprint International, headquartered in Northern Virginia but run out of Sprint's Kansas City HQ. Sprint International spun off into Alcatel Data Networks (the systems division) and Global One, a three-headed monster owned by Sprint, France Telecom, and Deutche Telekom, which didn't last, and the entity became part of Equant...(I'm getting very tired and ignorant by now, because I was long gone by then.) Now, as everyone knows, Sprint and Nextel have merged...
Who can pick up and/or correct my memories?
Year 2010:
SBC is split back up into baby bells.
no, Year 2010, The Empire of Microsoft Buys them all up =p
Clear as mud.
There's also the other end of AT&T craziness with AT&T Broadband and it's gobbling (TCI in my area) followed by its aquisition by Comcast.
It's a second end to an era of AT&T, a moment of silence please...
Did it just take them 20 years and billions in money transfers to just simply change its name from AT&T to SBC?
Isn't marrying your Ma considered incest? Oh, I forgot, SBC has its "roots" in Texas.....nevermind
So when will SBC buy BellSouth?
I think it's important to note that the Telecom Act of 1996 which [among other things] is responsible for the deregulation of the phone and media industries and led to the rise for Time Warner, News Corp, Clear Channel and SBC as conglomerate powerhouses.
http://www.fcc.gov/telecom.html
http://en.wikipedia.org/wiki/Telecommunications_Act_of_1996
But what about SunCom? Cingular didn't buy all of ATT wireless, it didn't buy it in the Carolinas, SunCom did. They are still selling under the ATT brand name...they are not owned by cingular. Where do they fit in?
Its unlikely that any telecom compay will ever be split up again b/c cable companys sucha as comcast are beginning to offer voip which is a viable alternative to traditional phone service. I'm really glad SBC gobbled up AT&T b/c I work for a company that does maket research for both SBC and Cingular so I/m might be getting raise;-)
This is exactly what I needed.
Thank you Engadget. Mainly you, Mr. Rojas.
So why did the Justice Department split them when they're just going to end up as one company again?
Is SBC and BellSouth the only remaining Baby Bells. It amusing that the offspring-company is going to gobble up the parent. Honestly! Kids these days; No respect.
Personally, I like AT&T's name better than SBC. I hope they change it.
One little tidbit that you left out was that AT&T acquired pioneer Cellphone company McCaw Cellular from Craig McCaw in 1994 for $11.5 billion, and that's what became AT&T Wireless (now Cingular).
"SBC [...] reaches an agreement to buy its former parent for $16 billion, $25 billion less than Cingular pays for AT&T Wireless."
If AT&T received $41 billion for their wireless division alone, how is it that they are suddenly worth $16 billion? Did they have $25 billion in outstanding liabilities (even more, since whatever was left of AT&T must have had some value too)? [scratching my head]
To poster #12, AT&T Wireless had already been spun off from AT&T proper. AT&T spun the shares off to AT&T shareholders a good couple of years before the SBC acquisition to make the thing tax free (or near tax free). Prior to the SBC takeover, AT&T Wireless had corporate shareholders such as AOL and DoCoMo of Japan. Actually, SBC had to receive permission from DoCoMo on the acquisition. Its really a shame that SBC outbid Vodafone for AT&T Wireless. Vodafone is at least competent and a purely wireless company.
In response to Yosh: Metropolitan Fiber Systems which became MCI and the company that became Sprint were started by American Express and other investment and trading firms to save money on long distance voice and data transfer. Pre-Sprint and MFS did this by using fiber-optics and satellite transmission. The technology worked so well that they wanted to offer it to the public and other private-sector interests. They found a significant obstacle in AT&T which was, up until then, a heavily gov't regulated monopoly. They sued under the Sherman Anti-Trust Act and won.
To #10
There is also Verizon which is Nynex/GTE/Bell Antlantic I'm not sure of their historys, nor that they were part of ATT, but I would assum that at least Bell Antlantic was a baby bell.
Yes and No. SBC and BellSouth today cover 5 of the original 7 baby bells. The other two were Nynex and Bell Atlantic. Bell Atlantic acquired Nynex in 1997, then merged with the national carrier GTE (which was nearly the same size as BA) in 2000 to become Verizon. That's how the second largest (after SBC+AT&T) carrier formed, but there's another little known fact about the #3 carrier. It was GTE that purchased the communications assets of Southern Pacific Railroad in 1984 ... to create GTE Sprint, soon to become Sprint Nextel.
Oops, correction. Southern New England Telephone was not a baby bell (RBOC), and SBC covers 4 (not 5) of the original 7 RBOCs. The one remaining was US West, which got acquired by Qwest Communications in 2000. Qwest itself was another company formed by Southern Pacific Railroad right after selling to GTE Sprint -- because GTE forgot to put a non-compete clause in the Sprint purchase contract. So, a simple railroad company is the father of what are now Sprint and Qwest. Not bad for "old school"!
A number of years ago my mother in law, at my request, put together a detailed family tree of the airline industry, reaching back to 1933. I may have to call on her talents to put a Telecom family tree together.
So is it possible that the 'old' corporate money in America has really been just changing names since the days of the railroad tycoons? Is there a good book about the history of American corporate money and ownership?
I bet in by next week Verizon Corp decides to by either MCI WorldCom or Qwest Communications.
I was Born in 1986 so i dont remeber the ATT monopoly but once they broke up into baby bells each of the regoinal bells had a monopoply on its own region. which defeated the purpose of breaking up ATT, My Question is if ATT got 62billion dollars from SBC and Cingular what happened to all of the money. As Well att sold all of its cable to comcast and Lucent is still a part of ATT so where is all the money, and what is att going to do with it
Ah... a chance to pontificate....
AT&T was the roll up creation of all of the local telephone and telegraph companies that existed from the 1879 invention of the telephone. It was the old MA Bell. After the enforced divestiture in the 80s it split into the baby bells and AT&T and BellCore.
AT&T cherry picked what someone thought was the most profitable core business. Equipment manufacturing, a PC group, Long Distance, and the old Bell Labs, where very very smart people worked.
Most of these core businesses turned out to be pretty crappy. When the telcommunications act of 96 which alllowed comprtition in local and long distance phones came about it was discovered that it was a lot easier to jump in on AT&T than for AT&T to jump in on the baby bells. They restructured again, forming Lucent out of the Bell Labs and Network equipment group, and AT&T which was the communications company , went on a buying spree to aquire the mobile phone and some broadband.
In short, AT&T has been a remarkable slow motion train wreck. Lucent sucks too.
Thanks guys.
That cleared up a lot.
To post #11-
To take it a step further- Craig McCaw went on to be involved in Nextel- which is now hooking up with sprint, which is supposed to remarket ATT wireless, which should now be a dead deal with sbc buying att.
As far as the whole break up from 1984-it dramatically lowered long distance rates but inflated local service but the real benefits went to the shareholders. The seven baby bells made massive gains in the stock market. Good old ATT (T) was the poorest performer of all. I guess SBC needs to buy Lucent next to complete the picture.
Well that cleared up and helped me understand all that better... until I read the comments. Now I'm back to square one. =P
Due to regulations, AT&T must start operating the NEW AT&T Wireless (using Sprint's network) as a competitor to Cingular (which acquired the Old AT&T Wireless, which was spun off from AT&T.)
While their hearts won't be in it, since they are now owned by SBC, a competitor to Sprint, which owns a majority interest in Cingular, which just acquired AT&T Wireless, they must still operate as a separate entity until the acquisition by SBC is blessed by the Justice Dept. which won't happen until early in 2006.
So, imagine you are the procurement person for a F500 company who is approached by a sales person from AT&T Wireless, which is really an AT&T salesperson, attempting to sell you Sprint's network even though he/she is likely out of a job once the acquisition by SBC, which owns Cingular which bought AT&T Wireless, is concluded. You, as the procurement person, must ask yourself, "Self, if I purchase wireless service from this telecom guy that launched an MVNO on a competitors network, what will happen to their interest in serving me once the acquisition is finalized?"
If I'm the procurement manager, I'm telling the AT&T salesperson posing as an AT&T Wireless salesperson pushing Sprint's network until their acquisition by SBC is final to shove off.
If I'm the AT&T salesperson, I'm likely out of a job. Don't forget that the former AT&T Wireless employees (those acquired by Cingular) have some hard feelings about their treatment at the hands of AT&T before they were spun off as AWE. It won't help matters much that for 8 months, they'll be competing with AT&T salespeople pushing Sprint's network.
Dear #6:
We do not take responsibility nor share the opinion for the comment posted by #25.
Sincerely,
Texas
OK let's go back to the Baby Bells- At Divestiture in '84 New York Telephone and New England Telephone (not to be confused with Southern New England Telephone), came toghether to become NYNEX, Chesapeaqueeand Patomic and NJ Bell became Bell Atlantic. Bell Atlantic later bought GTE and NYNEX and became Verizon....and that's only the Notheast and mid Atlantic part of the story. Another fun fact is that AT&T was originally formed when a local bell bought its parent so history is merely repaeating itself 120 years later!
Uh, actually, the feds did not "force" ATT to break up, they settled even though they had a good defense (and quite conceivably would have won their case). It is an arguable point as to whether actual phone rates went down or not as a result. Few seem to appreciate how benign (and regulated) a monopoly ATT was.
To post #27 Oh, you are just too witty.
Sincerely,
The Literate Part of Texas
Just to make everything a little more convoluted and get off the beaten track. GTE as part of it's "merger" to become Verizon had to sell off it's Iowa properties which were bought and created Iowa Telecom Services (ITS) by parent company Iowa Network Services (INS), a sister company to ITS, IWireless (formally Iowa Wireless), (IWS) is venture between T-mobile and INS. Where T-mobile USA, the US mobile division of Deutsche Telekom AG, was formally Voicestream who had bough up several regional players in the GSM space (Omnipoint, Aerial, Powertel, ect). Voicestream was spun off from Western Wireless, selling under the Cellular One brand, who now is being bought by Alltel. So there are a few more tidbits of info that make things interesting. Hey could leave the T-mobile out of the conversation.
Just to make everything a little more convoluted and get off the beaten track. GTE as part of it's "merger" to become Verizon had to sell off it's Iowa properties which were bought and created Iowa Telecom Services (ITS) by parent company Iowa Network Services (INS), a sister company to ITS, IWireless (formally Iowa Wireless), (IWS) is venture between T-mobile and INS. Where T-mobile USA, the US mobile division of Deutsche Telekom AG, was formally Voicestream who had bough up several regional players in the GSM space (Omnipoint, Aerial, Powertel, ect). Voicestream was spun off from Western Wireless, selling under the Cellular One brand, who now is being bought by Alltel. So there are a few more tidbits of info that make things interesting. Hey could leave the T-mobile out of the conversation.
Wow, so many of those comments are just so incredibly wrong...
#15: MFS didn't become MCI. MFS was a Competitive Access Provider (which later got called a CLEC, but CLECs used to be CAPs) started by Keiwit Construction to build local access networks using fiber optics system. MFS got bought by Worldcom, just like MCI did. Sprint, as Mark pointed out, was originally an internal communications network of the Southern Pacific Railroad, which was bought by a joint venture of GTE and United Telephone, an independent LEC. The former United Tel properties are now Sprint Local. American Express had nothing to do with either.
MCI originally stood for Microwave Communications Inc., and they built a line of microwave towers between Chicago and St. Louis that they used for private communications. When they wanted to sell capacity, they weren't blocked by AT&T so much as by FCC regulations, which gradually changed in the 60s and 70s (Above 890, MTS/WATS, etc.). MCI, Sprint, et. al., didn't sue under Sherman Antitrust. The DOJ did go after AT&T, which is what led to the breakup of AT&T, under a "voluntary divestiture" documented in the Modification of Final Judgement (MFJ), which is officially nothing more than a modification to a 1956 Consent Decree in another DOJ antitrust suit.
#16/17/18: The original seven "Baby Bells" were NYNEX (New York Telephone/New England Telephone), Bell Atlantic (Bell of PA, NJ Bell, Diamond State Telephone, C&P Telephone), BellSouth (Southern Bell, South Central Bell), Ameritech (Illinois, Indiana, Michigan, Ohio Bells and Wisconsin Telephone), Southwestern Bell, U S West (Mountain Bell, Northwestern Bell, Pacific Northwest Bell), and Pacific Telesis (Pacific Bell, Nevada Bell). Southern New England Telephone and Cincinnati Bell were not wholly owned by AT&T and aren't considered Baby Bells. Southwestern bought Pacific Telesis, Ameritech, and SNET, and changed its name to SBC (and covers three, not four, of the original RBOCs). Bell Atlantic bought NYNEX (plus GTE) and changed its name to Verizon. Qwest bought U S West.
#21: AT&T didn't get $62B from Cingular; AT&T spun off AWE about 7 years ago and used the proceeds to pay down debt primarily from the acquisition of TCI and MediaOne. Lucent hasn't been part of AT&T since 1996.
#22: Actually, the "core businesses" kept by AT&T were very profitable - so profitable, in fact, that the divestiture wrote into public policy and tariffs what had previously been internal transfer payments from AT&T Long Lines to the Bell Operating Companies. Long distance revenues were used within the Bell System to offset local loop and operational costs - long distance was priced well above cost, so that local phone service could be priced below cost and therefore affordable to everyone, because the value of a phone increases the more people have phones. (Robert Metcalfe popularized this principle, so that it's now called Metcalfe's Law, but before anyone ever heard of Ethernet it was well known, and called "network externality".)
To keep this subsidy in place, the architects of the regulatory regime that followed divestiture came up with the structure of Carrier Access Charges, payments from LD companies to local exchange companies, nominally for use of the local network, but actually tariffed subsidies. The problem is that long distance, which may have been a natural monopoly in the 1900s when only AT&T Long Lines had the technology to carry long distance voice communications (and only AT&T had built a LD network), clearly stopped being a natural monopoly when microwave point-to-point radio technology became cost-effective (q.v. MCI). When the FCC got out of the way and allowed for competition in LD, without effective competition in local service, the long distance carriers got unavoidably squeezed -- if you're paying three cents a minute to SBC and Verizon for access charges, there's a pretty effective floor on your pricing; allowing local companies to offer LD just put the final nail in the coffin -- because when SBC carries a call from Oakland to Hartford, guess what, it's not paying anyone three cents a minute in access charges...
#29: Actually, AT&T was originally formed as a subsidiary of American Bell, to offer long distance service, in 1885. The child became the parent in 1899 because AT&T was chartered as a New York corporation and American Bell was chartered as a Massachussets corporation, and MA corporate rules were much more restrictive with regard to American Bell's ability to raise capital (among other things). So the company transferred the assets of American Bell to AT&T.
After all of this, I just want to know who I should use as my wireless provider?
Does anyone know whether AT&T is legally required to release phone numbers to Cingular so that families aren't screwed by this absurdly complicated transaction? We once had an AT&T wireless families plan with 3 phones in NC and 1 up in NJ. The rules required AT&T to cede its NC customers to SunCom and its NJ customers to Cingular. SunCom will honor the original pricing agreement (39.99 for the first line 9.99 for each additional line), but Cingular obviously has no interest in providing solo service to the NJ phone for only 9.99 monthly, so that price will rise to their cheapest plan, 39.99 a month. SunCom says if we cancel any of its numbers we must pay $175 for each line cancelled and they won't release those numbers to Cingular so that we can just shift to one family plan. Do they have a legal obligation to release them or is it just their choice?
This is becoming mind numbing. Now SBC is changing is Cingular name to AT&T...which they just spent kazillions trying to kill the AT&T brand name!!
Verizon already bought MCI, has to be ok'ed still in a number of states. Verizon wanted MCI back in 1999/2000, what a monopoly that would've been. Back in 1986 phone booths read "Nynex: A Bell Atlantic Company", 10 years later they bought them. Verizon went to MCI and wanted to buy them in 1999/2000, but MCI didn't want them to see the accounting faud, so they said no. I bet they already made an agreement then or something. Verizon said that they have no interested in Qwest, which means that they thought about it, which means that Verizon will one day buy Qwest. Whatever Verizon wants, it gets.
Someone draw a chart or something! A timeline thing with pictures!!!
#9...perhaps T-Mobile is an appropriate suitor to SunCom? They currently have no presence in the Carolinas.