Business Watch: As landlines fade, AT&T pushes hard for merger
By Steve Tarter, Peoria Journal Star
October 16, 2011, Peoria — AT&T - once known affectionately as Ma Ball - now considers all those phone lines strung across the continent as a secondary concern.

Read the full version of this story on the Peoria Journal Star's website.
The landlines that once dominated our lives are getting pushed further and further into the background.

"Voice is the mature part of the business. Now voice wireline service makes up only 20 percent of AT&T's business," said Paul La Schiazza, president of AT&T-Illinois, in town last week to receive an award for the company's record of using diverse suppliers.

"AT&T (nationally) is one of the first companies to achieve $1 billion in supplier contracts with minority, women and disabled veterans," he said.

La Schiazza, the son of immigrant parents from Italy who settled in Chicago, has seen a lot of telephonic change since he started with Indiana Bell 32 years ago.

"More people, especially young people, are cutting the cord," he said, referring to customers who drop landline service completely. "We've changed our business model to be a mobile/broadband company," said La Schiazza.

Towards that end, the AT&T executive promoted the company's proposed merger with T-Mobile, a move opposed earlier this year by the U.S. Department of Justice.

While the two sides square off for a possible courtroom battle over the deal, La Schiazza makes the case that wireless customers would benefit from the merger - particularly here in Illinois.

Picking up the T-Mobile footprint would allow AT&T to cover 97 percent of the state of Illinois, he said, brandishing charts displaying the enhanced coverage area.

"Rural Illinois is (now) at a significant disadvantage," said La Schiazza, referring to the oft-cited digital divide that tends to favor wireless customers in metro areas.

Whether you're in a large city or small, the problem in this digital age is "a looming spectrum shortage," said La Schiazza. "We carry 1.5 billion text messages a day. There's just not enough spectrum to go around," he said.

La Schiazza doesn't see the government's concern over concentration in the wireless industry as an issue. "Ninety percent of the U.S. population has five carriers to choose from. In Illinois, there are 12 carriers now providing (wireless) service," he said.

When it comes to cellphone service, consumers want the best features and the best price, said La Chiazza. "They want signal strength. To offer 4G service requires an enormous investment that T-Mobile was never going to make," he said.

"Whether we buy them or not, (T-Mobile) is going to go away eventually," said La Chiazza.

But David Kolata, executive director of the Chicago-based Citizens Utility Board, is less thrilled about a possible T-Mobile-AT&T merger. "The cellphone industry is already pretty concentrated. When one of the biggest players buys another large company, it raises competitive concerns," he said.

"The fact that the Department of Justice and five or six state attorney generals (including Lisa Madigan in Illinois) across the country oppose the merger as currently proposed is an indication that it could be bad for consumers," said Kolata.

You have to look at what the merger could do to the cell phone landscape, he said. If the merger is approved, other companies (such as Sprint and Verizon) would most likely have to team up to stay competitive, said Kolata, raising the possibility of fewer choices for wireless consumers.

But Kolata is not hanging up on the possibility of compromise. "We do have concerns about (the merger) but we're not universally opposed to it," he said.