Communications consolidation after an era of no restraints

AT&T recently accepted an offer to be acquired by another company. So did MCI, which is what is left of MCI Worldcom. Both will become part of large local telephone companies, SBC and Verizon. Qwest also would like to buy MCI, but MCI had rejected its bid, as of this writing. Mergers sometimes result from an acquirer’s quest to fulfill a strategic vision for the future, and other times from the mopping-up of a bold vision gone awry. In this case, it is mostly the latter. Wait a minute. Is that right? Most people think of AT&T and MCI as boring telephone companies, not as companies who had bold visions or, for that matter, bold visions that failed. In reality the reasons for the failure are subtle, and the subtlety is worth understanding. Although we have not reached the end of all innovation in communications markets, these events do mark the end of innovative boldness by this market’s largest firms. More provocatively, there is a common view in industry circles that the AT&T and Worldcom sales will not affect innovative activity. I beg to differ.