COMMENTARY -- This is the greatest idea yet. You'll love it.
Everyone talks about M&A in communications, but none of the large multinationals want anything more to do with consumer voice services. Worldcom (Nasdaq: WCOM) reportedly has shopped its long distance unit around. Now The Wall Street Journal reports AT&T (NYSE: T) is thinking about ways to get its consumer business off the books.
Mind you, the phone conversations of Joe and Jane SixPack still generate a decent profit for these companies; AT&T reported a 37.1 percent profit margin (before interest and taxes) on almost $5 billion in consumer revenue during the second quarter. But it's a no-growth field: consumer revenue fell 7.2 percent year over year.
The regional Bell operating companies are supposedly taking market share, but the Baby Bells eventually will run into the same problem: there are only so many long-distance users around.
And margins will keep feeling the pressure of price wars. I wouldn't be surprised if someone starts offering free long distance in the not-too-distant future.
There's only one solution. It'll please consumers. It'll please the companies looking to shed consumers. It'll please the shareholders of those companies whose stock prices are lagging because they carry those consumers.
Nationalize long distance.
Wave the People's Workers' Paradise Telephone Banner and sing the Internationale for communications. Think about it: the cheapest electric power in the country comes from public authorities, not private utilities. Why can't we do the same for long distance?
A portion of your long distance bill pays for taxes and government surcharges anyway. And the government can't make a profit, so most of that 37.1 percent EBIT for AT&T's consumer unit -- that translated into $1.85 billion in the second quarter -- can be returned to users in the form of price cuts.
We're only talking about basic long distance. If you want cutting edge wireless services and broadband Internet access, the telecom companies will be happy -- even drooling with eagerness -- to sell you those more advanced products.
They're just tired of the old 1-800-10-10-220-COLLECT-CALL-CHEAP-RATES-NOW-NOW-NOW long distance rat race. No growth = no appeal.
So why force upstanding men like C. Michael Armstrong or Bernard Ebbers to carry it? Take it off their hands and guarantee service for all, while the telecom giants pursue their futuristic dreams of a wireless phone in every ear and a two-way coaxial cable line in every household. Dinosaur businesses will be lifted from corporate shoulders and stock prices will take off.
The consumer benefits are enormous. No more confusing rate plans. No more annoying ads with celebrities. No more customer slamming.
And when your phone service doesn't work or your bill looks too high, you can call your local congressional representatives and complain. They're used to hearing it.
You'll also ease all those silly regulatory concerns, so telecom companies can carry out gigantic mergers with more flexibility. Eliminate worries about concentrating too much long distance market influence in a few large corporations. We'll just concentrate it in one big government agency, and that will be just dandy, right?
No one cares about those old voice networks anyway. Let private industry focus on those fancy fiber optic lines and digital wireless systems.
It's a Revolutionary idea.
What's that you say? We've done the monopoly thing before?