BellSouth slammed by former officer

As the ads begin to run in local media trumpeting the absorption of BellSouth by AT&T folks may wonder just what is going on when one of the region’s commercial crown jewels goes on the block.

In an opinion piece titled: “BellSouth dithered and dallied, so good riddance to its memory” former VP Dick Yarbrough expresses contempt for his former company and lays out his thoughts on the takeover.

It is interesting to note that most of BellSouth’s top management was not invited to be a part of the new company. I guess the new AT&T didn’t want to run the risk of one day being subject to a takeover from Dairy Queen…

BellSouth’s life should not have ended so ignominiously. At the time of divestiture from the “old” AT&T just 23 years ago, the corporation consisted of two very strong telephone companies, Southern Bell and South Central Bell, and a game plan to compete vigorously in whatever unregulated businesses we thought would best fit our future, including the nascent cell phone business, later to be known as “wireless.”

We were located in the fastest-growing territory in the country. We had the best customers, the most dedicated employees, and the strongest financial position of the seven original Regional Bell Operating Companies. Wall Street analysts described us as “the Right Company in the Right Place at the Right Time,” and we were.

It’s true that BellSouth was once the fair-haired child of the Baby Bells. Wondering what the hell happened to the one who had all the advantages is worthwhile. But what Yarbourgh ignores is that none of the children are doing very well. Criticizing his former colleagues for failing to saddle shareholders and customers with enormous take-over debt buying into companies whose core business continues to shrink doesn’t sound all that dumb. (All the telephone companies continue to loose lines every year.)

While Yarbourgh’s criticisms have to sting, the analysis of what went wrong with BellSouth is a matter of what went wrong with the whole industry. BellSouth, as the strongest of the original clan, is simply the last to fall to consolidation as they all continue to falter. The industry’s problem was that it was and is unable to construct an adequate response to its central problem: its core business in telephony was failing. The phone companies all chose to adapt by combining two simple (and simplistic) strategies in various amounts: they bought their cell phone competition and they bought their competitors…the latter strategy purchased them false growth and the former brought real profits but missed the coming network age that offered the real opportunities.

BellSouth, as the strongest of the original groups, could have tended its garden, strengthened its network by actually building fiber back when the telecos started promising to do so, endured a few years of plummeting stock prices and emerged with a fiber-based network second to none in the world.

This would not have necessarily been a happy outcome for consumers, understand, but BellSouth would not have been a sick man in an ill industry; instead it would have been the visionary leader that built a new business context. Of course, at that time no one would have believed that the FCC and the Justice Department would have allowed the monopoly regional provider the vertical integration of services that the present administration ignores. They would have been left to offer common carriage to other users who would have provided us with video, and other new services.

Of course that is precisely what the phone people, raised on a steady diet of easy monopoly phone service income, found unacceptable — and that is why none of them ever built the promised fiber network. Their demise is sad and unnecessary. But BellSouth failed not because they didn’t buy out other failures; it failed because it didn’t have the good sense to give up a business model that had already had its day.

1 thought on “BellSouth slammed by former officer”

  1. From private correspondence from a west coast reader…just too apropos not to share.



    “BellSouth slammed by former officer” 1-22-07

    Yarbrough thought it was great when BellSouth was sticking it to its customers, but not when AT&T stuck it to BellSouth.

    From “My Fair Lady”:

    Just you wait, Henry Higgins, just you wait.
    You’ll be sorry, but your tears will be too late.
    You will be the one it’s done to,
    and you’ll have no one to run to,
    just you wait.

    Or, I might add, when BellSouth stuck it to him.