AT&T is a technological company that provides the communication services to the clients in the United States of America. The company has been in operation for approximately 130 years (“History of the AT&T Network – Overview| History| AT&T,” n.d.). The company has grown over the year through the provision of communication solutions to the families and the business enterprises and by adapting to the dynamic economic condition of the telecommunication industry and the turbulent forces that affect the business environment. AT&T has become a leader through research and providing the tailor made services to their vast clientele in the United States of America. This paper addresses the importance of merging AT&T and Time Warner as an important direction that will profit both companies and the clients in general. It also gives an analysis of how the advantages will lead to the success of both (“Origins| History| AT&T,” n.d.).
History and innovation
The history of AT&T dates back to the invention of the telephone. Alexander Graham Bell established the Bell Telephone Company in the year 1879 and then established the American Telephone and Telegram Company in 1885. The latter company acquired the former and became the sole provider of the telephone services in the United States of America. The company then became a monopoly up to 1982 when the anti-trust regulators split it. AT&T was then acquired by Baby bells in the year 2005 and the combined company was referred to as AT&T Inc. The company has grown as a result of mergers and acquisitions which has made it become a distinguished brand in the United States of America. The concept of ensuring that all the major cities and towns are connected through technology posed obstacles to AT&T. The company comes up with several discoveries and designs that helped them in dealing with the obstacles. The phone usage patent was pioneered by electrical amplifiers in 1913 and the leading coils in 1898 and they made it possible for the telephone services to expand to all the areas in the United States of America. AT&T together with its affiliates then expanded beyond the borders of the United States of America inn search for better business opportunities (“Overview: History of AT&T Television| History| AT&T,” n.d.,”SBC closes AT&T acquisition,” 2005).
The expansion did not just end in the borders but wen global meaning that most of the people in the world are able to communicate with each other across the oceans. The first transatlantic call from the United States of America was made in the year 1927 through the AT&T network. Since then the telephone network has been able to connect to the others across the world in a way that has never been experienced in history. The ability of the people to communicate through the oceans was a building block towards ensuring that the innovation geared by the company grows at a higher rate (“Origins| History| AT&T,” n.d.).
AT&T was formed with the aim of connecting the people in the society and it has stuck to the goal to date. It has become one of the drivers of technology and innovation in addition to being a telecommunication company. The spread of the company’s network transmission became possible because the company built the cable and the microwave-replay facilities which led to the development of the Unix operating system in the year 1971 that could run on any computer. It became a foundation on which the internet was built (“SBC closes AT&T acquisition,” 2005).
The history of the company shows a growth that has been influenced by positive associations and mergers that have led to the growth of the company to the extent that it has become a global brand in the world (“Graphical History of AT&T Splits And Mergers (the klog),” n.d.).
Tech, media and telecom industry outlook
AT&T was incepted when the communication industry was still rooted in the basic principles. The communication system was not as diverse as it is today. The main competitor that AT&T had to deal with at that time was the Thomas Morse’s telegraph system. The company was able to grow at a higher rate and overtook the use of telegrams both for domestic communications and corporate communications. By 1905, there were approximately 2.2 million phones in use, which was a good indicator of the growth of the company. The business dynamics that are being experienced today gauging on how the people communicate and the diversification of the communication field to include making calls as well as using social media platforms in communication makes the companies to do their best as a way of making sure that they have a competitive edge that will aid the growth of the company. AT&T, therefore, has to adjust to the current trends in the communication sector that will ensure the growth of the company and dominating the turbulent business environment. The modern communication technology includes the use of satellites, cable as well as the internet-based communication networks that include the social media networks (“Imagining the Internet,” n.d.).
The development of Facebook and WhatsApp as a major communication channel has revolutionized the communication industry (“WhatsApp hits 1.5 billion monthly users. $19B? Not so bad,” 2018). All the companies, therefore, have to lay out infrastructure to ensure that they meet the data needs of the increasing number of subscribers as the population of the people grows exponentially. They also need to stay in tabs with the improvement of technology in the society. The merger will help AT&T in the achievement of its goals with regards to the satisfaction of the customers by broadening their service delivery platform and increasing their ability to serve the clients better for the benefit of the society. AT&T is able to provide the cable television services when they merge. The cable television network can be upgraded to make sure that the company is able to provide the data services that will enhance communication among the clients. The merger is important to the customers due to the privileges that it offers to the clients. Imagine using your phone for both data, television, radio and the other social network. You can also imagine the scenario where all the companies are providing all the services but one of them fails (“Imagining the Internet,” n.d.).
AT&T and time warner merge and antitrust concerns
The competition is growing stiffer day by day as the telecommunication companies are looking for new ways to draw customers to their side and maintain the client-brand relationship indefinitely. The United States Department of Justice filed a lawsuit after AT&T announced a merger with Time-Warner in 2017 in an $85 million deal on the ground of antitrust. The lawsuit was an attempt to fulfill the Clayton Anti-trust act of 1914 that could protect the customers from any case of price fixing and prevent the resultant company from becoming a monopoly. On the basis of the lawsuit, the Depart of Justice was determined to prevent the cases of price fixing that could end up affecting the clients negatively as well as the exclusivity of the products and services of the new company that the merger would form (“Imagining the Internet,” n.d.).
It is important to note that the Department of Justice has good intentions with regards to the lawsuit. However, the legislation in which the lawsuit is rooted in does not apply to the AT&T and Time-Warner merger. The antitrust law does not draw a distinction between the horizontal and the vertical mergers. The horizontal merger may lead to price fixing hence the government needs to intervene but in the current merger, the two companies are not direct competitors hence the cases of price fixing are very unlikely. AT&T is able to work in a complementary manner in such a way that the former will provide its expertise in the cable and internet services whereas the latter will provide services in media and entertainment. The merger is more beneficial to the clients as opposed to being detrimental to them. The Department of Justice should not be an impediment in the quest of the companies to provide products and services to the clients. The merger will not lead to price fixing because the telecommunication and data industry is fairly competitive hence the market forces will always set the prices that are applicable to the market. The increase in the internet costs will not profit any of the companies in the merger rather it will drive the clients away (“Finance & Development,” 2017).
Mergers are one way in which the companies expand and get a bigger market share in the market. The regulator should not be so hard on the horizontal mergers since they are most of the time focused on the needs of the clients and better service delivery in addition to increasing the amount of profits. The regulator however needs to address the horizontal mergers since sometimes they lead to the development of monopolies in the market to the benefit of the company and to the detriment of the clients.
Finance & Development. (2017, July 29). Retrieved from http://www.imf.org/external/pubs/ft/fandd/basics/suppdem.htm
Graphical History of AT&T Splits And Mergers (the klog). (n.d.). Retrieved from http://subjunctive.net/klog/2008/12/graphical_history_of/
History of the AT&T Network – Overview| History| AT&T. (n.d.). Retrieved from http://www.corp.att.com/history/nethistory/
Imagining the Internet. (n.d.). Retrieved from http://www.elon.edu/e-web/predictions/150/1870.xhtml
Origins| History| AT&T. (n.d.). Retrieved from http://www.corp.att.com/history/history1.html
Overview: History of AT&T Television| History| AT&T. (n.d.). Retrieved from http://www.corp.att.com/history/television/
SBC closes AT&T acquisition. (2005, November 18). Retrieved from https://www.cnet.com/news/sbc-closes-at-38t-acquisition/
WhatsApp hits 1.5 billion monthly users. $19B? Not so bad. (2018, January 31). Retrieved from http://techcrunch.com/2018/01/31/whatsapp-hits-1-5-billion-monthly-users-19b-not-so-bad/