Standing Out in a Crowd

Posted: 02/1998

Standing Out in a Crowd

The long distance market is a pretty crowded place.

And with the entry of new satellite concerns, Internet
telephony providers, resellers of all stripes, and–perhaps
sooner than we all expected–the former Bell companies, it’s only
going to get worse.

On the up side, it’s the little guys that are seeing the
greatest growth.

According to a Federal Communications Commission study
released in October, AT&T Corp.’s revenues accounted for
about 48 percent of all long distance carrier revenues. MCI
Communications Corp.’s long distance market share was 20 percent
in 1996. Sprint Communications Co.’s was 10 percent. And WorldCom
Inc.’s was 6 percent. Smaller long distance carriers including
the likes of the Frontier companies, LCI International Telecom
Corp., Excel Telecommunications Inc., Cable & Wireless
Communications Inc. and many small and medium players
collectively made up the remaining share.

"The fastest growing carrier in the long distance
business is a company called ‘other,’" says Chris Mines,
senior analyst with Forrester Research Inc. "That’s gone
from 2 percent to 16 percent over the last decade. So that’s
where the growth is. It’s not in the Big Three or the Big Four.
‘Other’ is the company that’s growing in the long distance

Three cheers for David! But beware of Goliath.

According to Paul Wickre, president of Frame Relay Systems and
Technology, a Washington-based consultancy, AT&T, for the
past year-and-a-half, has been locking in its existing long
distance customers by offering new services and deep discounts.

Going forward, the paranoia of the big boys paired with
increased competition by newcomers and a glut of bandwidth
capacity will make it even more difficult for long distance
providers to make a buck.

The key to success going forward could very well be in

Although merger is the word of the day, the lean and mean
company that excels at marketing or delivering innovative network
services will be well-positioned for success.

Going forward, resellers will be able to choose from a vast
array of service and capacity providers.

A new class of business called a bandwidth exchange is
starting to develop. Companies such as Arbinet Communications
Inc. and RateXchange Inc. are offering a commodities market for
the sale and purchase of bandwidth.

Meanwhile, new "carrier’s carriers" are emerging.
Most prominent on that list of wholesalers is Qwest
Communications International Inc. But early competitive telecom
concerns such as Williams Communications, which sold its network
to what is now WorldCom Inc. and is now selling capacity on its
newly built fiber network to US WEST Communications and others,
and Kiewit Diversified Group, the company that provided the
original funding for MFS Communications Co. Inc., are getting
into the wholesale game.

"We think the lid is just about to be taken off the
supply side," says Forrester’s Mines.

Despite growing concern over the retail pricing tactics of
underlying carriers (see the editorial roundtable, p. 41),
resellers may find some relief on wholesale buy rates this year,
because the base of network operators is burgeoning. That will
intensify competition for resellers’ long distance traffic.

As the new editor-in-chief of PHONE+ magazine, I look
forward to watching as both the wholesale and retail markets move
forward. And I will lead the staff in reporting on and analyzing
the comings and goings of service providers.

Here’s hoping your company will be among those left with some
elbow room,
Paula Bernier

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