Wedding for Two Babies : Impact of huge merger on California jobs picture is unclear
PacTel, call home. It’s a Texas prefix.
The California phone company, formally the Pacific Telesis Group, is getting hitched to SBC Communications Inc. of San Antonio. The $16.7-billion merger of the two Baby Bell companies is the first of a round of consolidations expected in the telecommunications industry. Freed of the constraints of the 1934 federal communications law, telephone and other communications companies are scrambling to be more competitive in the new era of deregulation.
Outside the corporate suites, the news for Californians is mixed and creates new job uncertainties. Most mergers result in staff cutbacks, but SBC and PacTel, whose combined work force will total 100,000, said their combination will in fact create 1,000 or more new jobs in California.
Meanwhile, though, PacTel continues a program underway since 1994 to cut 10,000 jobs by 1998. Job jitters were aggravated by the timing of the PacTel-SBC announcement, which came on the same day that Wells Fargo completed its acquisition of First Interstate Bank and notified 1,750 employees that they would lose their jobs. In San Francisco, where SBC will continue to headquarter PacTel operations, Mayor Willie Brown’s staff is expected to begin studying the potential effect of the merger on employment there. SBC is known for its tightfisted management, PacTel for its technology.
The merger, subject to federal and state regulatory approvals, will create the second-largest U.S. telecommunications company, after AT&T.; It will have 30 million phone lines and operations in seven of the 10 largest U.S. metropolitan areas, including Los Angeles, Boston, Chicago and Dallas. The combined companies’ focus will be on wireless and international markets and long-distance service.
SBC, formerly Southwestern Bell, and PacTel were among the Baby Bell phone companies created in 1984 as a result of the breakup of AT&T; in a historic antitrust case. Ironically, competition is what is driving some of them back together. SBC has been the strongest performer among Baby Bells recently, thanks to economic growth in Texas and urban areas in Missouri and the company’s healthy cellular phone operations. PacTel, in a strategic misstep, spun off its lucrative cellular business and concentrated its efforts on California at a time when the state’s economy was sagging. Then the state’s toll call market was opened to competition last year. Will PacTel’s efforts to reach out to small business and minority and low-income users be continued by SBC? We hope so.
Though the big telecommunications companies may merge, there still will be much competition out there from cable companies, long-distance companies and other rivals. That should work to the benefit of consumers. In terms of jobs, unfortunately, there’s not a benefit for all.
