& cplSiteName &

SBC/AT&T: Possible Winners & Losers

Light Reading
News Analysis
Light Reading
1/28/2005
50%
50%

There's been a proposal, but no answer yet. Still, a possible marriage of SBC Communications Inc. (NYSE: SBC) and AT&T Corp. (NYSE: T) may have a $2 billion effect on the telecom equipment industry in just one year.

Yesterday (Thursday) Merrill Lynch & Co. Inc. analysts Tal Liani and Vivek Arya offered their take on the possible winners and losers if a merger takes place. If the widely rumored deal were to eventuate, it could depress the total U.S. wireline capital spending (capex) amount by 10 percent, or $2 billion, in 2005, the analysts write in a research note.

Merrill Lynch expects SBC and AT&T to spend a combined $7 billion in wireline capex in 2005. And Verizon Communications Inc. may be moved to decrease spending as competitive pressure recedes.

As with all deals of this scope, there will be winners and losers. Liani and Arya believe Adtran Inc. (Nasdaq: ADTN) and Sonus Networks Inc. (Nasdaq: SONS) could benefit from the merger, while Lucent Technologies Inc. (NYSE: LU), Nortel Networks Ltd. (NYSE/Toronto: NT), and Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7) may suffer. Here’s how:

Deployment of SBC’s fiber initiative, Project Lightspeed, could be pulled back as the company expends resources to integrate the AT&T network, the brief states. If so, DSL equipment vendor Adtran might find more opportunities in advance of SBC's eventual move to fiber. Alcatel (NYSE: ALA; Paris: CGEP:PA) might also lose some fiber equipment sales but could recoup with increased DSL gear sales.

A combined SBC and AT&T, the analysts say, would work to eliminate redundant spending on overlapping parts of their networks, specifically the two companies’ enterprise data services such as T1, Frame Relay, ATM, Ethernet, and private-line services. However, less entrenched players like Avici “could get shut out,” they write.

But over time an SBC/AT&T combo could provide a big boost to the rollout of intercity Ethernet virtual private LAN services by significantly increasing the number of customer endpoints touched by a single carrier, according to Heavy Reading analyst Stan Hubbard.

“As AT&T’s Rich Klapman and others have noted, there are about 90,000 to 100,000 major business locations that could use high-speed Ethernet services, but no operator has more than 10 percent of these key locations on-net,” Hubbard says. “This would definitely change that situation.” For long-distance services, Liani and Arya believe that SBC would combine the two legacy voice networks in order to “lower the cost of maintenance services from vendors.” This, the two say, would hurt incumbent suppliers Lucent and Nortel.

Spending might increase, however, on next-generation services such as VOIP. Arya and Liani say Sonus Networks might benefit if SBC takes an interest in ramping development on AT&T’s CallVantage, currently the second-largest VOIP service behind Vonage.

A likely theme in the months following an acquisition would be SBC’s firm hold on the reins when it comes to capex spending. “I would be concerned if I were a significant supplier to AT&T,” says Heavy Reading’s Hubbard. “In the past, such as in the case of the failed MCI/Sprint merger, we have seen a substantial pullback in capital spending on the part of the company being acquired."

Following are the equipment suppliers for key components in the carriers’ networks:

    SBC

    • MSPP: Fujitsu
    • Metro WDM: Nortel
    • Optical Switch: None
    • Core Router: Cisco
    • Edge Router: Cisco
    • Multiservice Switch: Ciena, Alcatel, Lucent, Cisco
    • Ethernet Switch: Cisco


    AT&T

    • MSPP: Cisco, Lucent, Nortel
    • Metro WDM: Nortel, Ciena
    • LH DWDM: Siemens, Lucent, NEC
    • Core Optical Switch: Ciena
    • Core Router: Cisco, Avici
    • Multiservice Switch: Cisco, Lucent
In trading Thursday, Sonus finished up 37 cents at $6.19; Avici fell 50 cents on news of a poor fourth quarter; and Adtran gained 16 cents to $17.96. Lucent stock closed up three cents at $3.30, while Nortel closed off two cents at $3.81.

— Mark Sullivan, Reporter, Light Reading
(17)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Page 1 / 2   >   >>
OldPOTS
50%
50%
OldPOTS,
User Rank: Light Beer
12/5/2012 | 3:28:24 AM
re: SBC/AT&T: Possible Winners & Losers
I too was stopped by this statement.

But upon further review, it is briliant from their point of view; Wireline is already down and left to us old folks. (They must be reading your comments)

This enables SBC to spread it's VOIP market coverage.
Acquire that VOIP (gurus, products and Market) wisdom/experience that has been claimed they lacked. This also allows them to slow roll VoIP.
It is also an insurance policy.

OldPOTS
rjmcmahon
50%
50%
rjmcmahon,
User Rank: Light Beer
12/5/2012 | 3:28:24 AM
re: SBC/AT&T: Possible Winners & Losers
Spending might increase, however, on next-generation services such as VOIP. Arya and Liani say Sonus Networks might benefit if SBC takes an interest in ramping development on AT&TGÇÖs CallVantage, currently the second-largest VOIP service behind Vonage.

I don't understand this reasoning. AT&T needed to get back into the local loop. With this merger aren't they back in? Isn't CallVantage just a redundant service to SBC's wireline POTS? What will this merger do to the AT&T and Intel WIMAX alliance?
DZED
50%
50%
DZED,
User Rank: Light Beer
12/5/2012 | 3:28:23 AM
re: SBC/AT&T: Possible Winners & Losers
Excuse me for being dumb, but isn't VOIP a bubble which is about to burst?
Isn't VOIP effectively a way of getting something for nothing? ie Unlimited long haul telephone calls for the price of your local internet connection?
When the telcos realise their revenue is drying up won't they do something about it?
aswath
50%
50%
aswath,
User Rank: Light Beer
12/5/2012 | 3:28:22 AM
re: SBC/AT&T: Possible Winners & Losers
Excuse me for being dumb, but isn't VOIP a bubble which is about to burst? Looks like a rhetorical question to me. So there is no need to answer.

Isn't VOIP effectively a way of getting something for nothing? ie Unlimited long haul telephone calls for the price of your local internet connection? It is if you also consider web browsing to be a way of getting something for nothing. The problem comes about only when VoIP tries to connect to PSTN. If you restrict yourself to communication within IP, then you will realize the many benefits of VoIP. (email never pretended to supplant or tried to connect to the postal system.)

When the telcos realise their revenue is drying up won't they do something about it? As long as ISPs allow web browsing where the web page streams sound, VoIP will not be restricted. VoIP is nothing more than two independent flows between two end points that are simultaneously a web server for one flow and a client for the other. Skype has demonstrated that this can be done. ISPs can restrict this VoIP only if they restrict web experience as well.
rjmcmahon
50%
50%
rjmcmahon,
User Rank: Light Beer
12/5/2012 | 3:28:21 AM
re: SBC/AT&T: Possible Winners & Losers
When the telcos realise their [voice] revenue is drying up won't they do something about it?

They have been doing something about it. For years they have been transitioning to wireless (cellular).

It's a bit more of a challenge on the wireline side and the transition there takes more time. Privatizing the rate payer funded access networks is a beginning and strategic move. This private control allows them to roll up and consolidate the independent ISP and CLEC businesses (amongst other things.)

Isn't VOIP effectively a way of getting something for nothing?

VoIP looks similar to the Strowger switch to me. It's a promising piece of technology that gives the possibility of customer choice, bypassing the Bells, and creating opportunities for independents. But, unfortunately, the direction things are headed isn't so promising for today's independent VoIP providers.

More on Strowger can be found at:

http://en.wikipedia.org/wiki/S...
jim_smith
50%
50%
jim_smith,
User Rank: Light Beer
12/5/2012 | 3:28:19 AM
re: SBC/AT&T: Possible Winners & Losers
SBC is now a serious contender in the Fortune 500 IP services market.

Also, SBC finally might be able to to put some revenue generating traffic on that freaking nationwide IP backbone that they built a couple of years ago.

I feel sad for the AT&T senior level managers. Ed is known to clean house pretty fast.
jim_smith
50%
50%
jim_smith,
User Rank: Light Beer
12/5/2012 | 3:28:18 AM
re: SBC/AT&T: Possible Winners & Losers
I feel sad for the AT&T senior level managers. Ed is known to clean house pretty fast.

Actually, I don't feel sad for them. Die suckers die!!!
rjs
50%
50%
rjs,
User Rank: Light Beer
12/5/2012 | 3:28:18 AM
re: SBC/AT&T: Possible Winners & Losers
DZED, what do you mean by something for
nothing??

People who have DSL or Cable have paid for the
pipe. Period.

What you mean to say is that the RBOC cannot
keep charging for voice the way they feel they
are entitled to. Tough %$#$


-rjs
aswath
50%
50%
aswath,
User Rank: Light Beer
12/5/2012 | 3:28:18 AM
re: SBC/AT&T: Possible Winners & Losers
What you mean to say is that the RBOC cannot
keep charging for voice the way they feel they
are entitled to.


I thought they are "entitled to" it as per FCC. So shouldn't we be lobbying there?
jim_smith
50%
50%
jim_smith,
User Rank: Light Beer
12/5/2012 | 3:28:17 AM
re: SBC/AT&T: Possible Winners & Losers
fg> Well, maybe, but I wouldn't hold my breath.

You woudn't hold your breath for what? AT&T has all the lines to businesses and now SBC owns them.

fg> Somehow purging managers who have had 20 years in a competitive industry will turn a monopolist into a fierce competitor?

What "competitive industry" are you talking about? Long distance? AT&T has already been chased out of that business. Besides, most of the people (managers or otherwise) who have been around for 20 years in telecom are pretty useless. So getting rid of them can only be good.

But, coming back to the original question, what "competitive industry" are you talking about? When one company (AT&T) has copper/fiber to almost all of the Fortune 500 (or is it 1000?) companies, it's not called a "competitive industry."

I have no love for SBC or AT&T. Are you with me?

fg> The only way anybody wins at this game is when the entire market is divided into a duopoly, SBC vs. VZ, with all LEC and ISP competitors squashed, and they start raising prices and cutting service the way a competitive market wouldn't tolerate.

I thought this was a done deal. Its not?

fg> In that case those two companies' senior managers win, though everybody else, including what's left of the US economy, gets trashed.

Telecom trashing the US economy? What are you talking about? Think social security and medicare. All those 20 year telecom experience old retired parasites are the ones that are going to bring down the economy. And the debt-ridden-to-the-max 800K silicon valley shack owners are of no help either.
Page 1 / 2   >   >>
Educational Resources
sponsor supplied content
Educational Resources Archive
From The Founder
Cisco's Conrad Clemson, recently promoted to head up the company's Service Provider Apps & Platforms developments, talks to Light Reading's Founder and CEO Steve Saunders about how he's bringing cloud video, mobile and virtualization together to empower network operators.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
Huawei's Pre-MWC Analyst Briefing 2017 Highlights

2|22|17   |     |   (0) comments


Huawei shares its vision for this year's MWC.
LRTV Interviews
MWC17: 5G, Cloud RAN & More

2|21|17   |   04:35   |   (0) comments


Ovum Senior Analyst Julian Bright talks to Scott Bicheno from Telecoms.com about all things MWC, including Cloud RAN, Huawei's pitch to the industry and the road to 5G.
LRTV Interviews
MWC 2017's Key 2-Letter Terms

2|20|17   |   08:29   |   (1) comment


5G, AI, VR... these are just some of the two-letter terms that will dominate show-floor chat at MWC 2017 in Barcelona, according to these two blow-hards (a.k.a. Scott Bicheno of Telecoms.com and Light Reading's Ray Le Maistre). And then there's PB...
LRTV Interviews
Key Trends for Mobile Operators in Developing Markets

2|20|17   |   06:37   |   (0) comments


Ovum's Matthew Reed talks to Scott Bicheno from Telecoms.com about the challenges and opportunities facing mobile operators in the developing markets of Africa and the Middle East.
LRTV Documentaries
YouTube Takes on Facebook Live-Streaming

2|17|17   |     |   (0) comments


Popular 'YouTubers' will be the first to get the new service on their smartphones. You have been warned.
LRTV Custom TV
Open Source NFV/SDN Automation

2|17|17   |   05:54   |   (0) comments


AT&T ECOMP (Enhanced Control, Orchestration, Management and Policy) code is transitioning into the Linux Foundation for placement into open source. In this video, Carol Wilson provides an update on the maturation of open source ECOMP and meets with industry leaders from AT&T, Bell Canada, Orange, Linux Foundation and Amdocs to discuss what this means for the ...
LRTV Documentaries
Uber & NASA Collaborate on Flying Car Project

2|16|17   |     |   (0) comments


Is Uber for real? Well, it's hired NASA engineer Mark Moore to lead the project, and he wouldn't come cheap.
LRTV Documentaries
Zuckerberg Tries Out the Oculus Rift VR Glove

2|15|17   |     |   (0) comments


Facebook CEO shows off a new way to interact with the Oculus Rift virtual reality headset: an Oculus glove.
LRTV Custom TV
Huawei Digital Transformation Forum 2017

2|10|17   |     |   (0) comments


Here's a preview of the upcoming Huawei Digital Transformation Forum taking place in Barcelona with trending telecom topics like cloud, IoT, 5G and much more!
Telecom Innovators Video Showcase
Dan Sahar of Qwilt on Open Edge Cloud Platform

2|8|17   |   08:38   |   (0) comments


Dan Sahar, Qwilt's co-founder, sits down with Steve Saunders of Light Reading for a conversation about Qwilt's Open Edge Cloud platform and the new role of service providers in application and content delivery.
LRTV Documentaries
ZeroStack's 'Self-Driving Cloud'

2|7|17   |   01:09   |   (0) comments


Its Z-Brain tech automates day-to-day management and long-term planning for hybrid clouds.
Telecom Innovators Video Showcase
Nominum's Craig Sprosts on DNS & Cybersecurity Trends

2|7|17   |     |   (0) comments


Nominum's Craig Sprosts talks about the fast-changing landscape of cybersecurity with Steve Saunders of Light Reading. Sprosts touches on the trend of the rise of ransomwares, rivals of IoT base attacks, and mobile network security. He also discusses the realization of the importance of IoT security after a recent cyber attack that paralyzed several major ...
Upcoming Live Events
March 21-22, 2017, The Curtis Hotel, Denver, CO
March 22, 2017, The Curtis Hotel, Denver, CO
March 22, 2017, The Curtis Hotel, Denver, CO
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Is the Time Right for a Cisco/Ericsson Wedding?
Ray Le Maistre, Editor-in-chief, 2/17/2017
Broadband Has a Problem on the Pole
Mari Silbey, Senior Editor, Cable/Video, 2/21/2017
Nice to See at Least One CSP Taking My Advice
Mitch Wagner, Editor, Enterprise Cloud, 2/17/2017
Charter Launches 5G Field Trials
Mari Silbey, Senior Editor, Cable/Video, 2/16/2017
RSAC 2017 in 4 Words
Curtis Franklin, Security Editor, 2/17/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Light Reading founder and CEO Steve Saunders chats with Sportlogiq CEO Craig Buntin about sports data analysis.
Eyal Waldman, CEO of Mellanox Technologies, speaks to Steve Saunders, CEO of Light Reading, for an exclusive interview about the 100 GB cable challenge, cybersecurity and much more.
Animals with Phones
No One Likes This Click Here
Take a hint!
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.