Article 9 of 352
The Daily Oklahoman
2000 The Oklahoman Publishing Company. All Rights Reserved.
AT&T's one-stop shopping plan made it king of the
Now, the company is dismantling its plan and dividing into
four separate companies. Along the way, it is eliminating its
$100 billion telephone and cable television empire that it
spent three years building.
"This is really kind of a strange development," said John
C. Roberts, law professor at DePaul University in Chicago.
"It's one that most experts would not have anticipated. Only a
year ago, everybody was saying that AT&T had the secret
for success in the new world and that the move to go into
cable was the smartest thing they ever did."
Oklahoma investors and consumers need to be cautious, said
Tulsa-based analyst Fred Russell.
"It's kind of like a reverse vasectomy," Russell said.
"They're undoing everything and expecting the consumers to be
patient and understanding, while abandoning all deserved
He said AT&T's strategy to group all its services and
consolidate management was ill-conceived.
Consumers want to know what each service costs. The bundled
bill makes it very difficult to determine what they're paying
for each service, Russell said.
The telecommunications giant set the trend for the industry
as it developed a bundling or one-stop shopping plan. It spent
$100 billion to buy cable giants TCI and MediaOne and also
formed other cable partnerships. The idea was to upgrade the
cable systems to offer telephone, television and Internet
service over their cable lines.
Analysts said AT&T was brilliant in its effort to go
around the local phone companies and get access to homes
through cable, Roberts said.
In the next 12 to 24 months the company will break into
four distinct entities, including an independent cable company
and an independent wireless company, all operating under the
AT&T brand name, spokeswoman Sue Fleming said. She said
the action was taken for many reasons.
"It lets each business be more agile in introducing new
services and competing in their own markets than perhaps they
can when you're part of a large corporation," Fleming said.
Roberts said the long-distance business is just old
"Everybody has lost confidence in long distance as a
business," he said. "I think that is one of the reasons why
AT&T stock has been dragging so terribly. It's not that
it's not profitable. It's not as profitable as investors would
like to be in an Internet economy."
Investors will find even more reason for being fickle.
When asked if the combined dividends paid by the four new
stocks is expected to be less than the current 88 cents per
share, spokesman David Caouette said, "I believe that is a
He said, though, that AT&T will be exploring different
growth opportunities and intends to review the dividend
Already, the stock market refuses to bless the AT&T
deal. The stock has been falling. On Wednesday, it closed at
$23.38, near its 52-week low of $21.25 and well below its high
AT&T also warned that it would earn 29 to 33 cents per
share in the fourth quarter ended Dec. 31. Analysts were
expecting 36 cents per share.
Russell said the stock tumble is no surprise.
"I have read the AT&T proposal," Russell said. "My IQ
is not high enough to figure out what investors will get out
of this. I think the consumer is entitled to clarity and, from
the investor or consumer point of view, he or she is not
Meanwhile, millions of consumers could take a hit when the
deal is completed over a few years, said Nicholas
Economides , professor of economics at New York
University's Leonard N. Stern School of Business.
"There was a real possibility if AT&T would provide
phone service by using cable, local service prices would fall,
service would increase, high-speed Internet would be available
at low prices," Economides said. "These are the good
things that might go away."
He said that would change if some other company is in
control of the cable service.
"That means it may be that the possibility of a second line
to your home will get eliminated, and you'll get stuck with
your local telephone provider," Economides said.
Analysts were uncertain of whether other telephone
companies would follow AT&T's lead. However, Bill
McCloskey, spokesman for Bell South, said the company is not
abandoning its bundling strategy.
"You can't be all things to all customers, but that doesn't
mean you can't try," he said. "When Bell South gets into long
distance, which we hope is soon, we plan to offer a bundle of
services because we believe that is what customers want."
AT&T has some 1,000 employees in Oklahoma, most with
the wireless unit in Oklahoma City. Another 650 employees will
be hired by the end of 2001 to work out of the Oklahoma City