The Bell Atlantic-Nynex Merger Case Studies Examples

Beginning of early 1960s did bring many competitions among the telecommunication competitors. AT&T Bell System provided Long Lines Division. It was the only company which had a great number of costumers and provided long-distance services through the country. A bunny whole was found when MCI – big company which brought a competitive wedge into the system on the beginning of 60s and 70s. Everything did begin when MCI decided to switch from private and business services to long distance services. MCI wanted to use AT&T facilities to provide access to its own. AT&T managed to win against MCI in court, but this actions brought a new wave of government field cases against AT&T. AT&T also managed to come clean out of the water. New and fresh Bell Atlantic Corporation and NYNEX Corporation were two regional Bell operating companies (RBOC). RBOC could provide connection services to long-distance companies such as MCI, Sprint, and another new AT&T. The only note was that regional Bell operating companies had a rule not to compete with other companies. The MFJ (Modification of Final Judgement) prohibited RBOC from providing their services in freshly created states. This allowed other firms to grow their potential in those states and finally those firms were interested to compete against RBOC.
In spring 1996, BAC (Bell Atlantic Corporation) and NYNEX Corporation companies came up with something new. These companies announced about their merge. One and a half year passed before they could merge. This procedure were allowed after DOJ (Department of Justice) and FCC (Federal Communication Commission) and other state commission gave their approval. This merge was said as one of the largest merge in United States history. Bell Atlantic Corporation supported six states. This six states were practically located on the east and included states starting from Virginia and ended in New Jersey. NYNEX Corporation sold its services to seven states starting from New York and ending in Maine. Merge of two companies have brought a capital of $51.3 billion. $27.8 billion were an operating money in addition to $51.3 billion. The leaders of the merge were not concerned about the public attention but the problems, in other words - competitive issues. Bell Atlantic Corporation and NYNEX Corporation were not a good competitors. They provided the same communication services but to different region (states) of the country. The Telecommunication Act of 1996, were created a several month before a big merge. This Act prohibited all laws which prevented firms from providing telecommunication services. The companies were forced to interact among each other with a low-costs. Small firms were allowed to use big companies loops, which connected each costumer to the network. Act also allowed other firms to buy long-distance services. These firms could change the name of it and set a new price for it. This actions were done to prevent costs that competitive might face. The Telecommunication Act also allowed small firms to provide communication services without building special buildings for it. This act provided local telephone services to compete with Bell Atlantic and NYNEX. We can tell that Bell Atlantic and NYNEX made a successful decision regarding their merge. If they didn’t do it, they would compete between each other and eventually one of them would give up its place to another.

The background information is going to explain why telecommunication services in 1960s were regulated monopoly.

Information stated in background will state how many authorized companies had a right to provide service around the state area and why absolute entry barriers existed.
Article will provide with the information regarding what seller was the leading company on communication market and how the whole in the “system” was found.
Government and other companies field cases against AT&T. Why were they created and what did they possess.
The Modification of Final Judgement restrictions for RBOC. Few positive effect that the small companies achieved.
The introduction will share some history of the two companies to show the importance of the merger at that point in time.
The introduction will share some history of the two companies to show the importance of the merger at that point in time.

This merger will also be identified as biggest transaction in United States history

The merge positive effects will be pointed out and why this merge had to be done will be explained.
1966 Communication Act acceptance. Pros and cons for BAC and NYNEX Corporations and small market companies.

Lessons learned from Communication Act mentioned earlier will be used to sum up the group paper.

1. Business sharks are not willing to share
2. Few opportunities will always exist for unpopular new companies
3. Leaders are convinced that they have all the power in their hands but it’s not.
4. Government will make sure that small companies will have a chance to compete with the big one.

References:

Brenner, S. (1997). Potential Competition and Local Telephone Service: The Bell Atlantic-NYNEX Merger (1st ed.).