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The Big Picture of Bell Long Distance Entry

Posted: 08/1999

Regulatory News

The Big Picture of Bell Long Distance Entry
By Kim Sunderland

The Bell companies’ plans to get into the long distance marketplace don’t include just
in-region provision, according to analysts with the Strategis Group, Washington, who say
the Bells will hook up with interexchange carriers (IXCs) to help build their one-stop
shops.

"The RBOCs (regional Bell operating companies) have been waiting a long time, and
1999 could be their year," says Peter Nighswander, vice president of the Strategis
Group’s competitive telephony practice. "RBOC partnerships with IXCs will allow them
to provide customers with a complete bundle of telecommunications services, including
local, long distance, wireless and data/Internet service."

And bundling of local and long distance service, Nighswander says, "is the highest
sought-after bundled service that a telecom provider can offer. Customers are looking for
this single point of entry."

To offer this, the Bells will continue positioning themselves for long distance entry
through mergers and acquisitions, according to Peter Jarich, a consultant for Strategis’
competitive telephony practice. For instance, New York-based Bell Atlantic Corp.’s prior
acquisition of NYNEX and its pending acquisition of GTE Corp., Stamford, Conn., will
position Bell Atlantic "to have a virtual nationwide long distance network,"
Jarich says. The same holds true for SBC Communications Inc., San Antonio, which owns
PacBell and awaits regulatory approval to buy Ameritech Corp., Hoffman Estates, Ill.


Image: Long Distance Revenue Distribution by Scenario, 2008 (in $ Billions)

"I think we will see more inter-industry merger and consolidation activity in the
years ahead as the RBOCs and other international telecom players continue their business
strategy to become major players in the long distance marketplace," Jarich says.

Another entry strategy to be employed by the Bells is "smart build," which is
a compromise between doing resale and buying a facilities-based IXC. "Strategic entry
means providing a pipeline to the home for a one-stop shop," Nighswander says.
"When RBOCs do get in to long distance, it will be a hybrid strategy" that
includes both entry solutions.


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