The Buzz: AT&T Rebuilding Ma Bell

A little over a year after SBC and AT&T announced plants to tie the knot and bring two baby Bells together, the newly-combined company went shopping again -- this time for BellSouth. Here's what the pundits are saying about the latest high-profile tech merger.

The deal would mean four of the seven original Bell companies are now back together. Initial reaction has proven to be somewhat negative, as many are leery of the power that AT&T would hold -- over phone lines, Internet and cellular phones, where it would be the dominant provider in each category.

"The merger of BellSouth and AT&T would create a near facsimile of the old Ma Bell, and it will have tremendous powers. And that may not be such good news for some start-ups, and equipment suppliers."
- Om Malik, Business 2.0

"Although I'm not surprised by the deal, I was a bit surprised with the timing. I expected something like this would happen after the acquisition of the "old" AT&T had been more fully digested. Of course, this move poses tremendous challenges - integrating not one large company, but now two. It will be hard for AT&T to be other than inward-focused over the next three years."
- Jay Pultz, Gartner

"Like SBC-AT&T, this is a deal that would've been unthinkable a decade ago. But we're in a place now where regulators have pretty much given up hope that the Bell Companies will ever compete head to head, except in very limited ways. And if they aren't competing, consumers won't lose by them getting together. Of course, I'm not sure that consumers gain very much either. There'll be the usual synergistic benefits, and a lot of people will get fired, and so the combined companies will cut costs. Not sure much of that will get passed on to the consumer. Not necessarily all that much."
- Joseph Lazlo, Jupiter Research

"Twenty years after the government broke up Ma Bell, this deal represents a mother and child reunion. This merger proposal is one that unquestionably merits the utmost scrutiny by government antitrust officials. In addition, I believe lawmakers should thoroughly review this merger proposal to fully assess its impact on consumers and competition."
- Rep. Ed Markey (D-MA), ranking Democrat on House Telecommunications and Internet Subcommittee

"AT&T is the DSL price cutter, and it's going to kill the cable companies."
- Financial pundit Jim Cramer, host of CNBC's Mad Money

"The combination of AT&T and BellSouth is likely to create more near-term challenges than opportunities for Internet giants such as Yahoo and Google. A combined AT&T/BellSouth would have nearly 42 percent of the market share for U.S. consumer access lines, according to TMCnet.With that kind of clout, the telecom giant can be expected to demand higher fees for Internet services sent over its networks, though a huge regulatory battle is sure to precede final approval of the deal."
- Bambi Francisco, MarketWatch

"Assuming that one-half (a percentage comparable to AT&T) of BellSouth's residential customer base is eventually targeted for a Lightspeed upgrade, Alcatel just picked up roughly 6 million lines of IPTV business assuming it doesn’t drop the ball...The merger is potentially negative from the standpoint there is one less major service provider (BellSouth) deploying the centralized (B-RAS centric) IPTV architecture, and thus one less potential customer for the E320."
- Joe Chiasson, Susquehanna Financial Group

"The deal will raise fears that Verizon is left with no option but to acquire Qwest, causing further regulatory issues. Qwest will need to find a suitor, which could include Verizon or Sprint’s new local unit, Embarq. Valor Communications, which acquired Alltel’s landline business, could also be a suitor. An AT&T-BellSouth deal would put pressure on Verizon to acquire the 45% stake of Verizon Wireless that Vodafone owns. Vodafone has already said that it is in talks to sell its Japan unit, meaning that the company now has even more leverage over Verizon to extract a serious premium for its stake in Verizon Wireless."
- Ben Silverman, telecom analyst