AT&T brings back the monopoly

So, the news is out there: AT&T – or rather, SBC assuming the moniker of the former long distance giant that it purchased – has struck a deal to acquire BellSouth Communications. The immediate impact: 10,000 people are going to lose their jobs, after the sale closes and the combined company moves to eliminate redundancies. But the long term impact is that, like its older and monopolistic ancestor, having a behemoth in control of so much of our communication infrastructure will ultimately mean higher prices for consumers.

Sure, AT&T will feed regulators the line that with the advent of Voice over IP and cell phones, competition will remain strong. But lets’ face it: AT&T already owns Cingular, the largest cell phone company in the US (and interestingly, the one that consistently rates worst for customer service… tell me nothing’s wrong with that picture). And most competitors still have to deal with AT&T in order to interconnect with its now-vast communications networks. If say, Verizon or Sprint needs to set a up a cell site in Texas, Louisiana or Mississippi, they need to connect (or “backhaul”) that cell site to the local telephone network in order to make it send and receive calls. And who must they pay for that service? AT&T, of course. And you can bet that AT&T will probably charge a much higher price to a competitor like Verizon and Sprint for that backhaul than it would to its own subsidiary, Cingular.

The result? Competitors will have to raise prices to cover the increased overhead, while Cingular will have less motivation to sell their service at lower rates if their competitors can’t do the same.

And then there’s AT&T’s newfound greed when it comes to data. The new behemoth, even before the BellSouth announcement, has proposed a scenario where content providers – Yahoo, Google and the like – would pay additional fees to AT&T in order to receive preferrential delivery on the network. Wihtout the payment, the priority of data coming from those sites would instead be put at the bottom of the list, ensuring poor quality of service. In effect, AT&T wants to be paid twice to transport the same content it has in the past. And who will ultimately be stuck with the bill? The end user of course, through higher prices for products and services offered by the content providers who must pay the “premium” internet bill.

Clearly, this merger doesn’t seem like it will be a win for anyone but AT&T. But then why should AT&T care? They’re the phone company.