Posted: 02/1998
Sherman Tank Arms for Retail
LOUISVILLE, Ky.--UniDial Communications, a long distance reseller with a nationwide network of 470 independent agents, has teamed with IXC Communications to form a retail sales organization called UniDial Communications Services, LLC, a.k.a. UniDial Direct.
UniDial will own 80 percent and IXC 20 percent of the new company, which will create and manage a national direct sales force to distribute UniDial long distance and data products over the IXC network, as well as the full suite of UniDial's Internet, wireless, voice mail and paging products.
UniDial has sold telecommunications services exclusively through the agent channel since 1994. It debuted selling agents franchises that included training, high-level support, a customer service plan, marketing materials and a potential back-end equity play when the company was acquired or did an initial public offering (IPO).
It's no secret that UniDial has been working toward an IPO for months, but the recent financial woes of public switchess resellers has soured the investment banking community on the category. Establishing more than one distribution channel would help in gaining Wall Street's confidence.
IXC, too, has heard the beating drum of Wall Street for a retail distribution channel, and has recently restructured into three divisions: emerging markets, wholesale and retail. "But it makes no sense for IXC to establish a retail brand," said Dave Thomas, president of IXC's retail division. "We are not a household name and it takes tremendous human and capital resources to become one. We are entering the retail business through companies that have already established strong regional brands in the commercial market space."
IXC recently acquired Oak Brook, Ill.-based Telecom One and Baton-Rouge, La.-based Network Long Distance, but left their brands and retail sales forces in tact. "IXC's strategy makes an awful lot of sense," said Richard Lukaj, vice president, Bear Stearns & Co. Inc. "It's a great way for the company to indirectly get into the retail side of the business without doing it overtly and therefore disturbing its historic relationships with carriers and resellers."
At a time when long distance resellers are growing impatient with underlying carriers over channel conflict (see "Resale Joust A. D. 1998," p. 40), UniDial's retail play begs the question: How do the company's agents, who have invested capital to become UniDial distributors, feel about their underlying provider establishing a nationwide retail sales force that could conceivably compete with them?
"The average account for a UniDial agent bills somewhere in the neighborhood of $250 a month, but the mean account for UniDial Direct will bill in the thousands," said Larry Fowler, executive vice president of Mission Viejo, Calif.-based PSI Network, UniDial's largest agent. "I doubt very much that we will be stepping on each other's toes. Most people think agents will be upset over this announcement. But we're not. We think it's one of the best moves UniDial has ever made."
Again, the branding issue is key. "I look at this in a very positive light because one of the hardest things to overcome in our industry--at least it has been over the last few years--is, 'Who is UniDial?'" said Gary Alto, president of GlobeCom Communications, an Akron, Ohio-based UniDial agent. "Unless the words AT&T, MCI or Sprint roll off your tongue, prospects never heard of you. If more people are out there spreading the UniDial name, then brand awareness increases, and you begin to knock down one of the most formidable barriers."
President and Chief Executive Officer J. Sherman Henderson said the new company will complement UniDial's core business, which is driven by its agents and sub-agents. "The entrepreneurial spirit of our independent agents has made UniDial an important force in this business, and we're committed to growing and supporting that program," he said. "But adding a direct sales force will give us the best of both worlds. We'll have our agent sales force continuing to sell to its prospects, and our UniDial network consultants dedicating themselves to the larger commercial accounts that need a special level of service.
"The Sherman tank is headed to battle," he continued. "This is the biggest opportunity UniDial has had in four years to really expand and become a major reseller by the turn of the century. We might even get there by year's end."
Midwest Cellular Selects Highland Lakes
AUSTIN, Texas--Highland Lakes Software recently announced that Madelia, Minn.-based Midwest Cellular recently chose Highland's Communications Accounting System (CAS).
Midwest Cellular resells cellular and wireless service, and picked the system for its cellular support. The company also will use the systems' support capabilities for other telecom products.
WorldxChange Unveils Penny Plan Agent Program
SAN DIEGO--WorldxChange Communications now offers a new dial-around program for its independent agents. The Penny Plan offers agents the ability to market a casual access product to both residential and commercial customers.
Casual access, also known as dial-around, allows customers to access the WorldxChange worldwide network simply by dialing 10629 plus the number they want to call and an agent identifier code at a prompt.
The Penny Plan features a nationwide 11 cents-per-minute domestic flat rate, commissions as high as 15 percent and low international rates. The plan has no forms or LOAs to fill out, no third-party confirmations and no sign-up fees or monthly usage fees.
"The performance of this exciting new product has been phenomenal," said Roger B. Abbott, WorldxChange CEO. "Never before have agents had the opportunities afforded to them by a cutting-edge product such as this. We fully expect the Penny Plan to rival anything else currently available to the agent marketplace."
IXC Extends Network to Pacific Northwest
AUSTIN, Texas--IXC Communications announced it will add 1,400 miles to its nationwide fiber network and establish a major presence in the Pacific Northwest as a result of a fiber exchange transaction with FTV Communications, LLC. Under the terms of the exchange, IXC will acquire fiber on a 1,400-mile route FTV is building between Las Vegas and Portland, Ore. In return, FTV will acquire fiber on the route IXC is building from Las Vegas to Los Angeles.
FTV was formed in September 1997 by Firstpoint Communications, Touch America and Williams Communi-cations Group.
Murdock Acquires Two Telecom Companies
CEDAR RAPIDS, Iowa--Murdock Communications Corp., a telecommunications systems and services provider for the lodging industry, has completed its acquisition of Priority International Communications Inc. (PIC) and PIC Resources Corp. (PIC-R). The two companies provide long distance and live operator services to the hospitality industry and to the public and private payphone markets in the United States and Mexico.
"There are three reasons the addition of PIC and PIC-R is a great opportunity for us," said Guy Murdock, chair and founder of Murdock Communications. "The acquisition expands our marketing presence in hospitality telecommunications systems and services. The PIC hospitality customer base is a natural target for our recently introduced MCC TeleManager product line. In addition, the acquisition creates a strong point of entry into the live operator service market and the private and public pay telephone markets."
PIC also expands Murdock's reach into the Mexico-to-U.S. long distance telephone traffic from hotels and payphones. This is a market that management believes offers significant volume and profit opportunities, Murdock said.
MCI, Nortel Sign LNP Marketing Agreement
DALLAS--MCI Systemhouse, MCI's global information technology company, has entered a marketing agreement with Nortel to provide connectivity for intelligent network-based local number portability (LNP) applications to regional number portability administration centers (NPACs).
MCI Systemhouse will offer customers of Nortel's ServiceBuilder service control point (SCP) LNP application the ability to connect to regional NPACs via an MCI Systemhouse local service management system (LSMS). Nortel, to assist its ServiceBuilder customers in facilitating LNP deployment, is engaging in a program to license its service management system open interface to selected LSMS vendors. Each vendor must undergo a certification process attesting to the successful completion of an interoperability test plan between the ServiceBuilder SCP and the vendor's LSMS.
RELTEC Moves, Updates Web Site
CLEVELAND--RELTEC Corp. recently updated its Internet home page to include search capabilities and ex-panded information on products, services, promotions and more. For further information, visit RELTEC's site at: http://www.relteccorp.com.
The company also has moved its corporate headquarters to 5900 Landerbrook Drive, Cleveland, Ohio. This move includes an area code change from 216 to 440.
Qwest to Buy Phoenix Network
DENVER--Qwest Communications International Inc. has signed an agreement to acquire long distance provider Phoenix Network Inc. for $28.5 million in stock and as much as $4 million in cash.
The acquisition will provide Qwest with 40,000 additional long distance customers, mostly in the business market. And it gives Phoenix a rich owner with its own network.
"Qwest is aggressively pursuing the extremely profitable business market with voice and data services," said Joseph P. Nacchio, president and CEO of Qwest, in a statement. "The acquisition of Phoenix Network propels us forward to accomplish these goals by giving us a solid business customer base and supplementing our growing nationwide sales channels."
Qwest is building a domestic 16,000-mile network to serve more than 125 cities with data and voice services. Currently 3,350 of those miles are activated from Los Angeles to Indianapolis, and from Dallas to Houston.
DMR TRECOM Changes Name
EDISON, N.J.--DMR TRECOM, the U.S. division of DMR Consulting Group, has changed its name to DMR Consulting Group to have a single brand name globally.
DMR Consulting Group, Fujitsu's professional services company, provides information technology services to business and public enterprises.
New SBC-SNET Combo Could
Loom Large in Long Distance
SAN ANTONIO--SBC Communications Inc.'s planned $4.4 billion purchase of Southern New England Telecommunica-tions Inc. positions the Texas-based Bell well to compete in both domestic and international long distance markets in the future, according to analysts.
Purchasing SNET will give SBC wireline, wireless, long distance, Internet and data assets in Connecticut and wireless service facilities in Rhode Island and western Massachusetts.
It gives SBC access to SNET's experience in offering long distance service, which SNET has been bundling with its local telephone offerings.
Since rolling out long distance services more than two years ago, SNET has captured 40 percent of the long distance market in Connecticut, said Dan Miglio, SNET's chairman and CEO.
Edward Whitacre, SBC chairman and CEO, said he expects SNET to be able to continue offering long distance in Connecticut after the acquisition is finalized, since SNET is not within the local service regional SBC received in the breakup of Ma Bell.
If the SNET deal goes through, SBC will have facilities on both coasts, noted Chris Landes, analyst with TeleChoice. He said that bicoastal presence gives SNET a strong potential international play since it owns the network points of presence where international calls will jump on and off the U.S. network to go to other countries.
He added that the long-rumored pairing of SBC with long distance giant AT&T Corp. is still a possibility.
Williams Re-enters Wholesale Networking Market
TULSA, Okla.--Williams has re-emerged on the network services wholesale scene three years after selling off its network to WorldCom Inc. for $2.5 billion.
As part of that deal, Williams signed a non-compete agreement banning it from selling tariffed communications services, particularly in the long distance arena. But that agreement expired in January.
So the gas pipeline and communications company last month began peddling local and long distance capacity (but not switched voice services), and frame relay and asynchronous transfer mode switched services. And it plans to eventually wholesale gas and electrical services to communications carriers, which in some cases are branching out to offer energy services.
Concentric Network, Intermedia Communications Inc. and US WEST Communications Corp. are the first customers to have each contracted Williams to provide them with network capacity and related services. The three deals represent a minimum of $1 billion in business for Williams.
In addition to wholesaling network services, Williams also will offer carrier co-location, network engineering and management, and professional services.
Williams currently has a coast-to-coast, 11,000 route-mile fiber optic network based on OC-48 (2.4 gigabits per second). By the end of this year it's expected to add 7,000 route miles operating at the OC-192 (10-gigabits per second) rate. And 25,000 route miles are expected to be in place by the end of 1999.
