Concert (BT / AT&T)

~ the obit ~

Concert turned over 7.748 billion dollars in the year 2000. That is a real number from AT&T's annual report, not a projection, and it belongs to a company that almost nobody outside the telecommunications industry can name today. It was the global business venture of BT and AT&T, owned half each, and it existed to sell international network service to the sort of customer who has offices in dozens of countries and a procurement department to match.

The two parents announced their intention in July 1998. The venture took the Concert name in 1999 and reached financial closure on 5 January 2000, which is the date AT&T's own 10-K uses when it says the two companies created a global venture. David Dorman ran it. Tim Smart was chief operating officer. At the end it had about 6,300 people and a network reaching into most of the countries that had networks.

The logic was sound on paper and it was the standard logic of the period. Multinational companies wanted one supplier for data circuits that crossed borders, instead of a separate national carrier in every market, each with its own billing and its own way of handling a fault. BT could not sell that alone and neither could AT&T. Together they could, and together they would also stop undercutting each other on the same accounts. What the plan did not survive was the price of international bandwidth falling off a cliff at exactly the moment the venture started trading.

~ the rap sheet ~

~ the two concerts ~

There were two companies called Concert and conflating them is the usual mistake. The first was Concert Communications Company, formed in June 1994 by BT and MCI, with MCI taking a 24.9 percent interest for about 79 million dollars. That one ran for four years, until BT sold its MCI stake into the WorldCom deal in 1998 and bought out MCI's share of Concert, leaving the venture wholly BT's.

The second Concert, the one that died in 2002, was a new 50/50 company with AT&T that absorbed what BT already had and reused the name. The brand therefore runs continuously from 1994 to 2002 while the company underneath it does not. Eight years is the life of the name. Twenty six months is the life of the venture that failed, and it is the second one this grave is dated to.

~ twenty six months ~

The numbers show how fast it went. In 2000 the venture reported 7.748 billion dollars of revenue, operating income of 329 million and net income of 99 million. In 2001 revenue fell to 6.189 billion, operating income became a loss of 1.025 billion, and the net loss was 1.116 billion. One year of thin profit, then a loss worth nearly a fifth of everything it sold.

Total assets stood at 9.355 billion dollars at the end of 2000 and 7.786 billion a year later, a balance sheet being written down while the business was still trading. The parents announced on 16 October 2001 that they would unwind it, twenty one months and eleven days after closure. Sir Peter Bonfield, then BT's chief executive, put it this way: "Since Concert was conceived as an international venture the global marketplace in our sector has changed out of all recognition and we need to change with it."

~ the unwind ~

AT&T's 10-Q for the first quarter of 2002 records the ending in a single line: "On April 1, 2002, the Concert joint venture was officially unwound and the venture's assets and customer accounts were distributed back to the parent companies." BT published its own completion notice separately and did not put a date on it. Each parent took back the contracts and assets it had put in, BT folding its share into the BT Ignite product lines, and up to 2,300 of the 6,300 jobs went, with the cost shared equally between the two owners.

The write-offs are quoted badly almost everywhere, usually as a round seven billion dollars. The filings are more specific and less tidy. AT&T took a 2.9 billion dollar pretax impairment, 1.8 billion after tax, on its investment. BT took a net impairment of about 1.2 billion pounds, and that figure is not purely Concert either. Inside it sit 350 million pounds for BT's separate AT&T Canada interest, roughly 300 million of Concert goodwill and roughly 825 million of fixed assets, most of that submarine cable, offset by a 400 million dollar receipt from AT&T. The round seven billion comes from adding a dollar figure to a pound figure across two different scopes.

This was enterprise plumbing and no household ever touched it. My own connection in 2000 was a dial-up account in Ankara, billed by the minute, and the carrier layer above it was not something a person could observe. Up there two national telephone companies had merged their global divisions to sell managed circuits to multinationals, and they wrote the result off again in less time than it took me to get through two years of a degree. The most expensive failures of that era were mostly this shape: enormous, and completely unobservable from a modem.

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