(EMAILWIRE.COM, October 27, 2004 ) CEDAR KNOLLS, NJ -- AT&T and MCI have announced billions in network equipment asset write downs. The relentless push to IP networking has made obsolete much of the older TDM asset base of these carriers. Whether these write-offs will help position either of these companies for sale remains to be seen, as both are very weak companies.

"These asset write downs should have been done years ago," said Allan Tumolillo, COO of Probe Financial Associates, "allowing both companies to compete with less. IP networking and the services it enables create pricing pressure across the board - in voice, in transport, and in applications. That, and the relentless competitive challenge posed by the RBOCs, have forced both carriers' hands."

"For the RBOCs, large scale write downs will have to come soon" said Tumolillo. "The RBOCs operate two access companies - their landline and their wireless operations - and the combination of these assets generates far less revenue per dollar of net plant than either a pure wireless play like Nextel, or even a weakened long distance carrier like AT&T."

Investors, already disillusioned with telecom, will expect leaner and meaner operators. Investors have long concluded that it may not be possible to gain a return on all of the RBOCs' obsolete assets in the ground, yet carrying them on the books reduces their ability to be more flexible. Pricing in services is likely to stay low or drop further, and the network asset base will have to "fit" to the market's ability to generate revenue.

PFA's new report, "Write-offs at MCI, AT&T: Positioning for Sale or VoIP? Will the RBOCs Follow Suit?" assesses the significance of the AT&T and MCI write downs and their implications for the RBOCs.
- # -

_____________________________________________________________________

To obtain more information on Probe Financial Associates and its products, contact Karen Verrinder or visit PFA on the web at www.probefin.com.

Contact:
Karen Verrinder
Tel. 973.734.0109, ext. 227
E-mail: mailto:kverrind@probegrp.com

Contact Information:
Probe Research, Inc.
Joseph Nchor
Tel:
Email us


This is a press release. Press release distribution and press release services by EmailWire.Com: http://www.emailwire.com/us-press-release-distribution.php.