None of this sits well with the hundreds of telecom companies in this country that compete with SBC, from small startups to titans like AT&T. Indeed, it's fair to say the Big Bells are the most hated companies in the telecommunications industry. Rivals complain that instead of competing in the open markets as expected, the Bells have merged with each other, creating ever more formidable companies with a stranglehold on huge swaths of territory.
"These retrenchment tactics by the Bells have stalled hope for a lot of competitors," says Gerry Salemme, senior VP with competitor XO Communications. Salemme was part of AT&T's lobbying force when the Telecom Act was written. "The biggest mistake was letting them merge. If they had to compete with each other, things would be very different," he adds.
Salemme's complaint has some merit. It's one thing to control a local market, but until the Big Bells demonstrate that they can compete in one another's territory, they will be provincialized. Lately, the Bells have been raising prices on DSL and other services, something competitors angrily point to as evidence of a complacent monopoly.
The most frustrating thing for competitors is that, since the Bells own the local phone networks, they own the customer databases, making it easy and cheap for them to sell other services. "They didn't spend a dime on advertising, but somehow all my customers ended up with them," says Sue Ashdown, the former head of a Net services company and current executive director of the American ISP Association, a lobbying group for small Internet firms.
This issue was outlined in a speech by AT&T CEO Mike Armstrong in February, on the fifth anniversary of the signing of the Telecom Act: "The bad news is that we lose money on every customer we win. Why? Because after we pay Verizon their so-called wholesale fee, there's no margin between what it costs us to provide service and what we can charge for it. And when there's no margin, there's no business."
It is increasingly clear competition will come not so much from government intervention, or even other phone companies, but from firms that have an alternative technology that gets around the Bells' aging local phone networks: satellite, cable or wireless.
