AT&T-BellSouth Merger to Mean End of Independent Cingular

AT&T will keep a presence on wireless issues in D.C., but some structural matters are up in the air, Cicconi said. “No such decision has been made” about whether AT&T will close Cingular’s D.C. office, he said: “Any decisions with regard to the Cingular operations will be made by AT&T Chairman Ed Whitacre and the Board of Directors after the merger closes.”

“I'm hearing that with the merger you're going to see a consolidated AT&T and an end to any semblance of Cingular independence,” a carrier source said: “What that means in terms of advocacy remains to be seen. I'm assuming they'll keep some of the key people Cingular has now and will continue to have a presence of some kind on wireless issues.” The sense another industry source has gotten from talks with key Cingular staff in D.C. and Atlanta is that Cingular will be folded into AT&T with no independent wireless unit, he said.

“It’s also the old Southwestern Bell’s M.O.,” the source said: “They've done a lot of acquisitions -- PacBell, Ameritech -- all of those companies had their own Washington offices and people who headed those offices. These mergers are defended to shareholders by their efficiencies and part of the efficiencies is getting rid of redundant offices and people.”

Cingular, like Verizon Wireless, has shown little inclination to take on issues in opposition to Bell interests. But Verizon Wireless, 40% owned by Vodafone, maintains a glass wall between its and Verizon Communications operations. While occupying offices in the same D.C. building, the Bell and its wireless subsidiary have separate suites and support staff, sharing only a receptionist. Verizon Wireless has separate D.C. office heads in Howard Woolley and John Scott, who report directly to Verizon Wireless officials, rather than Tom Tauke, head of the Verizon office. The pact with Vodafone assigns Verizon Wireless officials a fiduciary responsibility to take positions that will guarantee the health of the wireless business.

“On issues like the Missoula Plan [on intercarrier compensation reform] or interconnection or universal service reform, not surprisingly, wireless carriers are going to have a different set of interests than wireline carriers,” a wireless industry source said: “Verizon and the new AT&T are going to have different policies.” The source already sees differences between Cingular and Verizon Wireless, he said: “You have Cingular supporting the Missoula Plan and you don’t have Verizon Wireless doing it.”

The new AT&T wants Cingular wireless expertise, said a BellSouth source. Buyouts offered many BellSouth employees simply aren’t being offered to Cingular employees, the source said, a strong indication the D.C. team could stay intact. The merged company likely will consolidate real estate as a first step, the source said. The SBC-AT&T merger started a trend by consolidating D.C. offices, the source said, adding that BellSouth has the longest lease, inclining AT&T to move its operations there. An AT&T spokesman didn’t confirm the terms of the company’s D.C. lease by our deadline.

“There will be a number of people who will be retained who are particularly adept at handling wireless issues and they will try to maintain whatever independence they can,” said a regulatory attorney who works on wireless issues: “The company will see some benefit to letting the wireless unit operate with some autonomy.”

Among the main question marks is the role to be played by Brian Fontes -- Cingular’s respected D.C. office head and former FCC chief of staff, several sources said.