Is 'Ma Bell' being reborn?

NEW YORK — The biggest communications company in America is about to get even bigger.

AT&T on Sunday announced plans to buy BellSouth for $67 billion in stock plus the assumption of about $22 billion in debt.

The deal would create a communications goliath with the heft and reach to take on cable TV giants, telecom rivals and wireless competitors of every stripe.

With BellSouth in its pocket, AT&T — known as SBC until it bought its one-time parent AT&T last year and adopted its corporate moniker — would extend its lead as the United States' undisputed No. 1 communications company and gain full control of the largest wireless phone provider.

The combined company would have more than $120 billion in annual revenue. No. 2 Verizon has more than $90 billion in annual revenue, including the addition of MCI, which closed in January.

Consumer groups and some politicians are already decrying the transaction as another step toward reconstitution of the old Ma Bell phone monopoly. They suggested that prices for a broad range of communications services — from high-speed Internet connections to basic phone service — could shoot up as a result.

The common concern? Consolidation.

Four of the original seven regional Bell phone companies created in the court-ordered breakup of AT&T — plus what remained of AT&T — would become part of the new AT&T. An additional two regional Bells — Bell Atlantic and Nynex — along with GTE and MCI, now are part of Verizon.

The only Bell of the seven still standing apart is Qwest, an amalgam of the old US WEST and long-distance company Qwest, which serves much of Utah, among other areas. Qwest, which has fallen on hard times in recent years, has been on the auction block for a while. So far, there have been no takers.

The BellSouth deal wasn't entirely unexpected. The regional carrier was too small to be considered a national player. With the communications industry becoming dominated by a handful of giants, its growth prospects were also limited.

Opponents line up

Still, the reality that BellSouth — the largest of the seven Bells in 1984 but now one of the smallest — was selling out seemed to hit a raw nerve in Washington.

"This is devastating for consumers," says Gene Kimmelman, public policy director of Consumers Union.

Kimmelman says his group intends to ask the Department of Justice to block the deal on anti-competitive grounds.

With each Bell merger, he noted, the public has been assured that vigorous competition would follow. But it never did, he says.