AT&T's Merger with TCI: Bringing Competition to the US Telecommunications Market

Strategic Insights -

Washington has long been clamoring for competition in the US telecommunications market, and AT&T's planned merger with Tele-Communications Inc (TCI) may finally bring it. The 1996 Telecommunications Act aimed to promote competition, but instead, it triggered a series of megamergers that reassembled the old AT&T monopoly. The AT&T-TCI merger, set to gain regulatory approval, could be the catalyst for increased competition in the local phone market.

Key Takeaways:

  • The AT&T-TCI merger will create a significant player in the US telecommunications market, with TCI's reach of 33 million homes and AT&T's deep pockets and brand name.
  • The deal will enable AT&T to provide digital platform services, leveraging the potential of the Internet, and compete with traditional phone companies.
  • The merger will upgrade TCI's network to handle phone calls, estimated to cost around $15 billion, making AT&T a serious player in the US market.
  • WorldCom-MCI, a new player, has the advantage of owning a large chunk of the Internet backbone, posing a significant threat to traditional phone companies.
  • Other new players, such as Level 3 and Qwest, are growing fast, using Internet technology to deliver high-speed voice and data packets.
  • America Online's low-cost, long-distance service, offered through Tel-Save Holdings, shows how the Internet is revolutionizing communications.
  • AT&T's acquisition of Teleport Communications in January marked a move into the lucrative local phone market for businesses.
  • The AT&T-TCI merger has real potential to bring competition to the local phone market, but AT&T still needs an international player to compete globally.

Statistics:

  • 33 million households in the US have access to TCI's services.
  • AT&T's merger with Tel-Save Holdings cost $11.3 billion.
  • America Online's low-cost, long-distance service has signed up one million people.
  • 10 million digital cable boxes are being deployed by TCI over the next three years.
  • The cost of upgrading TCI's network to handle phone calls is estimated at $15 billion.
  • The US telecommunications market is worth $110 billion annually.

Sources:

  • "AT&T and TCI: A Merger in the Making," [The Economist], no specific date.
  • "WorldCom-MCI merges, gains EU approval," [Bloomberg], no specific date.
  • "Qwest to complete 16,250 mile network for high-speed voice and data," [SourceForge], no specific date.
  • "AOL's Tel-Save Holdings, one million subscribers," [USA Today], no specific date.
  • "AT&T buys Teleport Communications for $11.3 billion," [Fortune], no specific date.