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AT&T breakup means war on the LECs.

... says Probe Research's Victor Schnee

AT&T's split into three companies is a bold declaration of war on the local exchange industry. AT&T finally has shed the illusion that they can sell equipment to their primary competitors, the Regional Bells.

AT&T's packaging of wireless and long distance will spearhead its assault on the local exchange. Every RBOC has to refocus its agenda. Traditional long distance and wireless will consume every cent of resources. RBOCs' cable-TV, video dialtone and entertainment adventures are seriously threatened. The RBOCs now have to face real competition- the AT&T powerhouse.

AT&T has apparently looked at closely, and rejected, the sale of its equipment businesses. That these businesses have enormous opportunities in growing international markets appears undeniable. However, this does not argue for retaining them as a part of AT&T. AT&T can capture the value of these businesses by selling them and focusing on its core business.

It would appear likely that when the core business comes under increased competition and faces more instability, AT&T will have to rethink its position on the equipment business, and sale is likely.

Copyright 1995 by Nelson Publishing. Text may not be copied without the express written permission of Nelson Publishing.

Schnee, Victor, AT&T breakup means war on the LECs.., Vol. 32, Communications News, 12-01-1995, pp 6.