A lot of attention goes nowadays to telephony and its several forms--baby bells, wireless, VoIP, ma bell, etc. Two of the latest developments will be analyzed here:
1) The announced acquisition of ATT by SBC;
2) WI-FI enabled (wireless) phones.
1. Many a reason has been given for the situation ATT has gotten itself into. As far as I can tell, here there are some of them:
a) McKinsey's advice: In the early 80's McKinsey (under-)estimated the wireless market to reach up to 1 million wireless subscribers by the end of the 90's (70+ actually). In the mid 90's, the same McKinsey was suggesting synergies at the intersection of bandwidth, content, and services. ATT's Armstrong and AOL-Time Warner were pursuing these very opportunities and lost big--yeah, it could be endlessly argued about reasons but it is of no use for those shareholders who lost value in the process.
b) The unintended consequences brought about by the actions/intentions of regulators: On one hand, regulatory constraints prevented ATT from making much of its NCR acquisition--thus, loosing big on the computer revolution. On the other, it was after the 1996 Telecom Act that we've witnessed not only dropping long distance rates but also the demise of the long-distance carriers. It is not by chance that the biggest acquirers of the day are the baby bells, so, to the extent the regulators intended the replacement of one big monopoly by several ones as defined by smaller geography, regulation has been a success.
c) ATT's peculiar culture, as revealed by recent studies/books or through direct interaction with telecom types in the industry--who doesn't have a story to tell about some ATT alumnus whose modus operandi was about (#minutes * fee)?
So, it's been strategy (or lack thereof), regulators, and culture, that brought about the demise of this icon. As a side note, ATT might have done well to hedge McKinsey advice in the 80's by considering instead an approach similar to Shell's scenario planning--just as an example. Another conclusion one may draw from the evolution of the telecoms could be that a monopoly--through its quasi-guaranteed cash-flow--is better for business than market forces alone. Otherwise, how can one explain why it is that local monopolies acquire most anybody else?
2. Soon, one will be able to go to any WI-FI hotspot (e.g. one's own house, Starbucks, etc.) and be able to make a call from a WI-FI enabled cell phone, over the Internet. Clear winners, for now, seem to be the handset makers and the Vonages of the world. Let us not talk about losers for now for the consumer will not always be in winner's seat. VoIP in general may lead us into a near-term future where there will be only low-, and high-quality telephony (corresponding to VoIP and land-line, respectively.) The so called high quality telephony may come at a premium and through further consolidation. Unless the baby-bells manage to bring into one's home a bundle of digital goodies priced for masses. For starters, I still dream of a cafeteria-style menu of TV programming choices. But, where did we start?