Monopoly comes naturally to phone companies

The Leckey File

Your Money

December 19, 2004|By ANDREW LECKEY

Hello, children. Gather around now.

Our fantasy tale begins in a time long ago, when there was just one telephone company. Its kingdom was large, and its unbreakable phones and hardy installation crews were everywhere. It kept a humble outpost in most towns, where a respectful citizenry gave allegiance and paid phone bills. This was Camelot, but no one knew it.

A powerful judge in Washington ruled this was too much of a good thing, something called a monopoly. Like a steel-willed King Solomon, he ordered the phone company chopped up into pieces.

For the next quarter-century, bits and pieces of the former mighty phone company bumped into walls, made dinnertime sales calls to weary families, bought into unprofitable, unrelated businesses, wooed regulators and tried to pull together again.

Some pieces fell under the influence of unscrupulous wizard chief executives, who later would be ignominiously sent to dungeons. Several merged after awkward courtships and the banishing of legions of their loyal workers to unemployment lines. New competitors rose up and, behold, they, too, began to merge.

Most recently, Sprint Corp. and Nextel Communications Inc. announced they coveted each other's businesses and wished to unite domains. The problem is that this is a mixed marriage, with Sprint using a popular cell-phone technology called CDMA (code division multiple access), and Nextel employing an outmoded technology called iDEN (integrated digital enhanced network), not compatible with higher-speed Internet services.

Signifying further incompatibility, Sprint focuses on consumers through humorous television commercials featuring a muse in a black trench coat, while Nextel emphasizes business customers as it extols the virtues of its walkie-talkie service.

Nextel's shares rose on the announcement, while Sprint shares stumbled. However, the gods of Wall Street soon gave their cautious blessing with a consensus "buy" recommendation on stocks of both, believing the magic of technology would uncover ways for the merged company to prosper.

But, ominously, as the newlyweds began their wedding feast, storm clouds were forming. There was word that the bloodthirsty forces of Cingular Wireless, Verizon Communications and other rivals were gathering outside the gates of the kingdom.

Their chilling chant revealed the ultimate aim of such combined aggression: "One telephone company - now and forever."

- Andrew Leckey

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