The Spokesman-Review Newspaper
The Spokesman-Review Newspaper The Spokesman-Review
Spokane, Washington  Est. May 19, 1883
Current Temperature
48°F
Current Conditions
Few clouds
View complete weather report
Subscribe now

Baby Bell Merger Forms A Communications Giant

Associated Press

Seems like just yesterday they were Baby Bells and now they’re getting married.

SBC Communications Inc. and Pacific Telesis Group on Monday became the first big local phone companies to combine, strengthening their ability to confront new competition in the revamped world of telecommunications.

SBC will pay $16.7 billion in stock for Pacific Telesis. It’s not only the biggest deal since the phone business was deregulated in February, but marks the rising star of SBC, which may someday join the constellation of widely recognized phone acronyms like AT&T and MCI.

The merger won’t mean immediate changes for the millions of consumers who buy phone service from the two companies, which operate in seven states including the two biggest, California and Texas.

But it marks a milepost on a road that telecommunication companies of all kinds, driven by the new regulations and technology, are taking toward providing many services - local and long distance phoning, video and data exchange.

“Everybody’s been saying this was going to happen for awhile and here we go,” said Scott Wright, who follows the telecommunications industry for Argus Research.

One Spokane company that has a direct connection to the merger is VideoWave Television. The company, which is a microwave competitor of Cox Cable and companies offering direct satellite feeds for television programming, is owned by Pacific Telesis.

The deal surprised investors and observers who were expecting the first merger of Baby Bell companies - the local carriers formed in the 1984 breakup of the Bell System - to be Nynex Corp. and Bell Atlantic Corp.

They combined their cellular businesses last year and have since confirmed discussions about a broader relationship. But they had no comment Monday in the wake of the SBC-Pacific Telesis deal.

The leaders of SBC and Pacific Telesis, meanwhile, exhibited a small measure of pride at their surprise deal. “While others are talking about it, we’re doing it,” Pacific Telesis chief executive Phil Quigley said.