Telephone companies set for expansion

April 1, 1996

Telephone companies set for expansion

ben Harrison

Telecommunications vendors, users, industry analysts and academic experts universally predict a leap in fiber-optic deployment and applications resulting from the Telecommunications Act of 1996. All foresee an upswing for providers of fiber-optic equipment and services, although there may be a period of delay in legislative approval processes as players seek to define their markets and figure out how to best to serve them.

Traver H. Kennedy, director of wide area research worldwide for the Boston-based Aberdeen Group Inc., says, "To be blunt, the Telecommunications Act of 1996 should bring brisk, sustained demand for fiber supplies and contract services in the near term and over the next decade. There may be fits and starts at times, but overall, the fiber industry couldn`t get better news. It`s like pouring an accelerant on the fire of telecommunications services, creating demand for infrastructure expansion.

"In the first 10 days following passage of the bill, nearly all of the U.S.-based carriers and several foreign partners announced new service offerings or development strategies. In the first 36 hours after introducing its long-distance and international services, Chicago-based Ameritech Corp. signed on 126,000 new customers.

"In contrast, MFS Communications Co. Inc. of Omaha, NE, announced that it had contracted local exchange carriers in all 50 states to provide competitive access provider services under the new co-carrier rules," Kennedy says.

Other carriers, such as AT&T, the nation`s largest long-distance provider, are not moving so quickly. AT&T is looking at providing local telephone service in all 50 states by reselling regional Bell operating company services. Other long-distance carriers have different plans, although they have not ruled out resale of local services.

Despite all of the elation, a precautionary note comes from William Cadogan, chief executive of Minneapolis-based ADC Telecommunications, a major telecommunications and fiber-optic communications supplier. He believes that companies will spend a large part of 1996 occupied with state and federal filings as well as defining which businesses they will now serve.

Nevertheless, a major fiber-optic communications provider, Lucent Technologies (formerly AT&T Network Systems, see Lightwave, March 1996, page 3), applauds the Act. According to spokesman Rich Meyer, "We welcome the prospect of a more-competitive services industry, which brings more offerings to businesses and consumers and more opportunity to the telecommunications industry. These changes will give service providers even greater incentives to have the best possible networks. It has always been our position that when local markets were competitive there would no longer be a need for the restrictions imposed upon the Bell companies under the 1984 divestiture."

Vern Mackall, senior analyst at Northern Business Information in New York City and former member of the technical staffs at Lucent Technologies and Bell Communications Research, concurs. "Passing of the Telecom Act accelerates the blurring between types of carriers. Local exchange carriers, interexchange carriers, competitive access providers and cable multiple systems operators will increasingly play into each others` markets as each moves toward being a one-stop provider of bundled services. We`ll also see more alliances and mergers over time, as carriers try to capitalize on changes in the competitive landscape. Already, Bell Atlantic and Nynex are discussing expanding their cooperation--they already have merged their cellular operations--and MCI and AT&T are going to work together to build out local networks in competition with the local exchange carriers," Mackall says.

Bell Atlantic is also leaping into the long-distance business, seeking to provide service in North and South Carolina, Florida, Illinois and Texas, where it does not provide local telephone service. Shirley Risoldi, a Bell Atlantic spokesperson, expects regulatory approval in all the states and predicts the telephone company will be providing service by the end of June.

More fiber-to-the-curb applications

Furthermore, in light of the competition that will result from the Telecommunications Act of 1996, increased fiber-to-the-curb applications are also a possible area of growth for Bell Atlantic. According to spokesperson Harry Mitchell, the company is already deploying a full array of services with its fiber-optic network architecture.

Mitchell cites Bell Atlantic`s Dover Township video dial tone network, which provides voice, data, video and interactive services along the central New Jersey shore. It uses digital switching and fiber-optic cables, which carry both telephone and video signals to a neighborhood terminal optical network unit. This fiber-to-the-curb application is expected to pass 38,000 homes and businesses when completed.

In addition to network expansion, the Telecommunications Act impacts the way in which Bell operating companies market their services. For example, BellSouth, traditionally a conservative, established business communications organization, is becoming more aggressive. Spokesman Tim Klein in Atlanta says the company is improving marketing budgets, increasing advertising and becoming involved with golf tournaments and international sporting events such as the Olympics. He also says the company is pushing services and expanding its fiber-optic network. Presently, BellSouth has more than 405,755 fiber miles deployed in Georgia.

Klein notes that BellSouth is more rural than US West and is also beefing up its fiber-to-the-curb deployments. BellSouth is investing more than $3 billion annually to upgrade its communications network, according to Klein.

Bill Seekamp, a Southern New England Telephone (SNET) spokesman, explains that telecommunications competition really began in 1994 in Connecticut with state legislation that made the telecommunications arena more competitive. "Connecticut is ahead of the game; we have filed for a franchise to provide cable-TV service, and we see fiber-optic deployments increasing. Also, SNET`s rapidly expanded fiber- optics-based capability is integral to advancing the latest network services," Seekamp says.

Howard Taylor, president of the SNET Custom Business Group, says that his company recently launched SNET Enterprise Solutions to provide network solutions for Connecticut businesses. He says that this suite of "integrated product and service packages will help our customers analyze alternatives and select the appropriate mix of voice, data and video services that not only meets existing needs, but also allows a smooth migration to future solutions."

Taylor notes that SNET is upgrading the entire state with a hybrid fiber/coaxial-cable network that supports high-speed networking applications. SNET has installed end-to-end digital networks for several major Connecticut businesses. q

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