Premier 100: Execs see promise in AT&T-BellSouth deal

08.03.2006
Several IT managers interviewed at Computerworld's Premier 100 IT Leaders Conference Wednesday said they plan to closely watch the planned merger between AT&T Inc. and BellSouth Corp. But they said that overall, the continuing consolidation in the telecommunications industry holds more potential benefits than drawbacks for their companies.

The US$67 billion stock-swap deal between AT&T and BellSouth, announced Sunday, would give the combined entity control of four of the seven regional Bell companies that were created after the 1984 breakup of the original AT&T Corp.

Some of the IT executives said the possibility that pricing for telecom services could increase because of diminished competition is a concern.

"There's a possibility that it will go back into a state like it was in the past, before deregulation," said John Fisher, a 2006 Premier 100 honoree. Fisher, who in late January started a consulting firm called Rethinking IT Inc. after spending 10 years as CIO at SmithBucklin Corp. in Chicago, added that vendors may try to take a different approach with users "if they're the only game in town."

Fisher also voiced concerns about possible disruptions in service delivery because of internal issues at AT&T and BellSouth as the planned merger proceeds. He said SmithBucklin experienced such disruptions after SBC Communications Inc.'s 1998 acquisition of Ameritech Corp., which was the trade association and IT user group management firm's local telecom service provider. SBC bought the remnants of AT&T Corp. last year and renamed itself AT&T Inc.

When SBC took over Ameritech, "there was turmoil in the staff, and they couldn't answer questions as quickly as they did before," Fisher said. "What you find in mergers like this is that people become distracted and aren't able to do their jobs as well for the customer. It's the water-cooler effect."