Convergence and the birth of a new AT&T

The proposed AT&T – Bellsouth merger signals the unfreezing of the US telecommunications industry and is likely to send seismic waves through the industry. If the merger goes through, the erstwhile baby bells will be reduced to three major players: AT&T, Verizon and Qwest. Further, there is some talk of Verizon making a move on Qwest and reducing the sector to a duopoly. The AT&T merger makes sense when you consider existing industry conditions.
Cable industries with their triple-play (TV, internet broadband, phone) offerings have stolen share from the traditional baby bells and consolidation might help AT&T cope with this convergence threat better. The new entity plans to apply the same brand across all its offerings and this should help reduce ad spend. The increased consumer base should also help when it comes to investment and roll-out  of new technologies such as IPTV. Scale should also help AT&T in dealing with its suppliers. The regulatory environment these days also seems to be favorable to such a move even though questions of how this merger would affect the net-neutrality issue persist. This merger might bring benefits to residential customers in the form of lower prices and increased choices but business consumers might suffer from a reduction in choices of service providers. It will be interesting to see how the cable companies and Verizon respond to this merger.