BellSouth, SBC deepen financial ties as rumors float of a meeting with Durel

Is BellSouth looking for a life raft?

The Atlanta-based company is the junior partner with Dallas-based SBC in Cingular Wireless, which just became the largest wireless provider in the country thanks to its recently approved buyout of AT&T Wireless’s customer base. AT&T Wireless (the brand) will actually stay around, in what has to go down as one of the weirdest buyouts in recent corporate history. AT&T wireless, in fact, has bought network services from Sprint so that it can roll out a new advanced wireless network. A buyout that didn’t remove a competitor from the field? Weird!

Any way, back to BellSouth. Word now comes that the company is again ponying up with its Dallas sugar daddy to buy YellowPages.com. No word in this story on the financial split, but the operation will be based in SBC’s footprint. A BellSouth guy will head the new venture, with two SBC guys serving as VPs.

This comes on the heels of a rumored meeting in Lafayette on Tuesday night between BellSouth bigwigs and Lafayette Mayor/President Joey Durel. If the meeting did in fact happen, and I have no information to confirm whether it did or not, it could be a sign that the unnatural alliance between Cox and BellSouth in Lafayette is fracturing.

As I’ve written on a number of occasions here before, Cox has BellSouth’s Louisiana business base in its sites. BellSouth finds itself in a no-win situation of knowing that its going to lose market share, regardless of how much money it invests in new infrastructure here. The fact is, though, that the company doesn’t have the money or the will to invest significant dollars in new infrastructure here primarily because of the fact that Cox is moving so aggressively against it in the market place.

The proposed LUS fiber to the premises project could, in fact, offer BellSouth a path to maintain at least some of its customer base here without having to undertake the full cost of building a new network. That “could” depends on the willingness of LUS to open its network to access to other providers (like BellSouth). I think it would be a financial win for LUS to do this because it would bring more revenue more quickly to the system than an LUS-only approach would.

BellSouth’s problem is its own propaganda. For most of this year, BellSouth and other RBOCs (like SBC) have been crowing over a court win which overturned rules for network sharing. The RBOCs have maintained that the rules made it financially impossible to justify new network investments. What the RBOCs (including BellSouth) neglected to say was that earlier law and rulings had already exempted them from having to share new fiber networks with competitors.

Still, SBC and Verizon announced big fiber plans and cited the roll-back of the network sharing rules as the justification for moving forward. It was a great slight of hand trick.

So, if BellSouth has reached out to the Durel administration seeking to broker a deal, it would undermine months of public pronouncements from the RBOCs about how network sharing is a financial drag. There’s been research to show that the argument was bogus. It would be a welcome development for an RBOC like BellSouth to confirm it via a deal here in Lafayette.