Friday, February 04, 2005

For Whom The Ma-Bell Tolled

Founded in 1876 by Alexander Grahambell, American Telephone & Telegraph Company is a legend in the Hall of Business fame. 128 years of existence (2 raised to power 7) came to a close, in a tad bit oedipal fashion, when it was acquired by one of the baby bells called SBC(Southwestern Bell Corporation) . SBC acquired AT & T for $16 billion and the current merger valued at $70 billion.

Telecom industry is revitalizing itself with internal rebuilding after 4 years of glut to create a vibrant industry( (MCI is fingered as the next target by other bell companies such as Qwest, Verizon and BellSouth). Nevertheless AT & T, fondly called Ma-Bell by hackers, nerds and others alike, reserves a special place among them because it is simply more than a corporation.

There can be very few corporations like AT&T. It was the largest firm on the planet both by revenue and market capitalisation for most part of the last century. Ma-Bell's legendary research wing, Bell Labs, created some of greatest inventions, from the transistor to the laser, and fielded 7 Nobel laurates. It was instrumental in ensuring the success of the US in WW 2. It was a rare government sanctioned monopoly that made it a good target for punks and enabled the creation of hacker culture. It was under this Bell's shade that Claude Shannon published his most influential paper "A Mathematical Theory of Communication" which is the underlying theory thay enables data transmission from Satellites far across the universe. Bell Labs was the birthplace of Unix operating system that still powers the most mission critical computers today. If such a glorious history went into its evolution then What went wrong ??

My Take : It got so specialised with its own internal culture that when environmental changes in the sector demanded that the company change, it choked, because of the very factors that made the company unique. For example consider the split of Ma-Bell into Baby Bells in 1984 due to the Sherman Anti Trust act (the same one which was used in the Microsoft Antitrust case). This split was not as smooth as Rockefeller's Standard Oil company broken up into babies like Exxon,Chevron and Texaco because they dealt in commodities.AT & T provided services which a li'l bit different. To ease this pain AT & T responded voluntarily split itself into Lucent Technologies and AT &T dividing itself into services and products. I would not venture into Lucent's misgivings that came about in its short term attempts to make the shareholders happy.(e.g They delivered their equipment to customers for free who didnt order the equipment, just so that they can cook their books to record a sale and bump the share price). No wonder Sarbanes- Oxley Act was passed in 2002 just to prevent these kind of corporate misbehavior.

The Rise of a stupid network called Internet changed all that.While Ma-Bell invested itself in pumping intelligence into its voice networks, buying cable companies, entering late into wireless market, the Internet changed the world as Ma-Bell knew it. Customers demanded more data networks (which ironically ran over its very own circuits) while Ma-Bell ran into a dep debt crisis responding to their changing requirements. The problem was that AT & T, Lucent had the most wodely held stock base in the US. Those holding the stock couldnt sleep and decided to pull the plug.It makes business sense.

I lament thy demise, O' Ma-Bell...For whom did you toll :(

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