The regulatory drama surrounding last month’s FCC approval of the AT&T-BellSouth merger largely overshadowed any talk of the deal’s technology implications. But the deal could affect AT&T’s strategy as it rolls out IPTV and wireless technology across the country. True, AT&T and BellSouth have taken different tech approaches in the past. But now that the two companies are about to become one (pending shareholder approval), AT&T’s financial success could hinge largely on how well it merges technologies across all of its vast territories, including BellSouth’s soon-to-be-annexed kingdom. BellSouth and IPTV

Only a few days before gaining FCC merger approval, AT&T announced it would finally follow through on promises to extend its U-verse IPTV service beyond San Antonio — hitting 11 other markets in 2006, down from its original goal of 15. Why the delays and tempered ambitions? Technology. Microsoft has been working furiously to perfect its IPTV interface since AT&T started testing the service. BellSouth, meanwhile, was always noncommittal on IPTV and only started trials after the AT&T merger announcement. Could BellSouth’s influence force a happy medium that mixes IPTV with more established cable technology, accelerating AT&T’s video rollout? Or will BellSouth be assimilated by the Borg?

Wireless and Product Integration

For AT&T, perhaps one of the brightest spots of the merger with BellSouth is the consolidation of the two telcos’ Cingular joint venture into an entity controlled solely by AT&T. Amid all the press surrounding AT&T’s IPTV ambitions, it may seem like wireless will take a back seat. Wrong. Since gaining FCC approval, AT&T chairman/CEO Ed Whitacre has been talking up wireless even more than IPTV, vowing that customers will soon be able to choose bundles combining wireless service and Internet access. That could very well be the first step toward integrating U-verse’s services with portable devices. As always, the question is whether the technology will roll out quickly or languish in trials.

Size Matters

Let’s face it: The new AT&T makes Comcast look like a mom-and-pop. AT&T and BellSouth’s combined annual revenue in 2005 exceeded $64 billion while Comcast brought in only about a third of that. AT&T’s massive cash flow is a cushion that can fund IPTV, mobile and tech adventures galore. Massive size also means better volume discounts on set-tops and AT&T/Cingular-branded wireless devices. Cable may need to pull together through CableLabs and even private partnerships to compete on scale. AT&T’s size doesn’t guarantee tech success, but it’s hard to ignore the potential power of Ma Bell.

Michael Grebb is executive editor of CableFAX Daily. He can be reached at

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