Work 2.21.05

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Back to the future: The phone wars took off when AT&T broke up in 1984. Back to the present:

Two titans (SBC, Verizon), four unfinished stories (BellSouth, Sprint Nextel, Qwest, T-Mobile) and a cacophony of telecom marketing.

American Telephone & Telegraph Co.

Alexander Graham Bell invented the telephone in 1876. American Bell Telephone Co., created by Mr. Bell and financial backers, formed American Telephone & Telegraph Co. as a subsidiary in 1885 to build the original long-distance network. In an 1899 reorganization, AT&T emerged as the parent of the Bell System, owning local phone companies across the country. The U.S. government began antitrust proceedings in 1912; AT&T held off action by winning declaration as a regulated "national monopoly." The antitrust battle resumed in the '70s, culminating in the breakup of AT&T Jan. 1, 1984-D-Day, divestiture day-into a shrunken AT&T and seven Baby Bells.

Southwestern Bell began 1984 as the smallest of the Baby Bells with an old-fashioned name and a strong rural American franchise. SBC Communications emerged as a financial success story, using its new might to swallow Pacific Telesis (1997) and Ameritech (1999). With its January deal to buy AT&T, SBC has reassembled half of the old Bell System. Problem: Decline in local and long-distance service, challenge of sharing wireless play Cingular with BellSouth. Opportunity: TV, business market.

Bell Atlantic bought Nynex in 1997, merged with GTE to form Verizon in 2000 and agreed this month to buy MCI. PROBLEM: Decline in local and long-distance service, challenge of sharing wireless play with Vodafone. OPPORTUNITY: TV, business market.

The Southern Pacific Railroad started Sprint in the '70s with long-distance wires along its tracks. Nextel began in 1987 by cobbling together taxi dispatch frequencies. Problem: Decline in long distance, challenge of merging wireless systems, lacks breadth of SBC and Verizon. Opportunity: Closest thing to a standalone titan in wireless market. Appealing takeover target, or could diversify with more deals.

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