Ma Bell Redux?

So, AT&T is buying BellSouth. Ho hum.

Predictably, a flurry of reports call this the return of the pre-1984 Bell System, when the old AT&T held a monopoly on telephone service in most of the US. In reality, it’s just another small step in the direction the US telecom industry has been moving for several years. Somewhere along the way, we gave up on the idea that local telephone companies would compete with each other. Instead, we put our faith in “intermodal” competition, brough on by cable TV operators, wireless connections, powerline broadband, and VOIP.

I have many concerns about this choice, but there’s no point crying over spilt milk. The New AT&T is different than the old Ma Bell AT&T — in many ways weaker, but far less fettered by regulation and inertia. It faces real threats to its core business in the form of wireless substitution and, increasingly, VOIP. But that was the story two months ago, and a year ago, and even two years ago. The BellSouth acquisition just moves some numbers around on a spreadsheet.

Don’t expect this is the end of consolidation in the telecom sector.