The volume has been very low this week. A holding pattern waiting for news?
I have no way of following the inner workings of NN, but I do follow a couple smaller companies and know there's a lot of activity going on and I fully expect more announcements if not before Supercomm, then certainly at the show. The industry is steaming and we've barely begun to feel the effects. One of the private companies I follow has a CPE solution that all the major players are after and their VP of Business Development said the interest at Interop was nothing short of staggering.
An indication of how the playing field is changing, a year ago the RBOCs seemed to be stuck in their tracks. Now, they're becoming creative and finding ways around the long distance juggernauts. In other words, what's good for the goose is good for the gander.
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May 14, 1998
Ameritech Pursues Qwest Pact
Despite Suit Involving UÿSÿWest
By STEPHANIE N. MEHTA
Staff Reporter of THE WALL STREET JOURNAL
Ameritech Corp. has agreed to market the long-distance services of Qwest Communications International Inc., even as rivals sued to block a similar pact between Qwest and another Bell, UÿSÿWest Communications Group Inc.
The Ameritech pact, which people familiar with the matter said would be announced Thursday, calls for the Chicago-based Bell to market Qwest service in its five-state Midwest territory. Like UÿSÿWest, Ameritech would get an undisclosed fee for each customer it signs up on Qwest's behalf. Qwest, in turn, would guarantee the Ameritech customer a low per-minute rate on long-distance calls. Neither Ameritech nor Qwest would comment.
Qwest-UÿSÿWest Agreement Draws Criticism of Legality (May 8)
UÿSÿWest Strikes Marketing Alliance With Qwest in Move Skirting Rules (May 7)
While the local Bell telephone companies are prohibited from owning and operating long-distance businesses in their home territories until they open their local-phone networks to competitors, UÿSÿWest has argued that federal law allows it to sell the services of an unaffiliated carrier. The Bell has noted that such an agreement would satisfy calls from its customers to receive local phone service, which UÿSÿWest provides, and long-distance on one monthly billing statement.
Rivals disagree. AT&T Corp., MCI Communications Corp. and four other parties Wednesday filed suit in the Seattle federal court to block the marketing deal, charging that it violates the Telecommunications Act of 1996. "UÿSÿWest and Qwest are attempting to make a mockery out of the Telecom Act," said Jonathan B. Sallet, MCI's chief policy counsel. The Association for Local Telecommunications Services, a trade group, McLeodUSA Telecommunications, a unit of McLeodUSA Inc., ICG Communications Inc. and GST Telecommunications Inc. joined in the lawsuit. Qwest wasn't named as a defendant.
This has been a trying week for companies fighting the Bells. MCI, which will soon merge with WorldCom Inc., and AT&T have been trying to delay the Bells from entering their long-distance market until the Bell markets are open to full competition. First, the UÿSÿWest-Qwest deal was announced a week ago. Then, on Monday, Ameritech announced that it had agreed to be sold to SBC Communications Inc., a merger that would form a 13-state telecommunications giant. Eventually, that company wants to be allowed into the long-distance business where it could garner billions of dollars in business from AT&T and other carriers.
The move underscores Ameritech's strategy to offer multiple telecommunications services on a single bill. In addition to local-telephone services, the carrier in some cities can add cellular, security-monitoring and cable-television services to a customer's monthly phone bill.
For Qwest, such arrangements bring the prospect of new customers. Joseph P. Nacchio, Qwest's chief executive officer, said last week that he expects the UÿSÿWest pact to bring up to $200 million in additional revenue in the first year. UÿSÿWest doesn't get a cut of the revenue other than what it gets for signing up a customer.
Nevertheless, incumbent long-distance carriers see such arrangements as a threat. If a residential customer calls the local carrier to order basic phone service, the operators might automatically steer the consumer to Qwest's service instead of offering customers a choice of long-distance carriers. "Deals like this make it impossible to assure that all long-distance carriers and their customers are being treated fairly by these monopolies," said Mark Rosenblum, an AT&T vice president for law and public policy.
Indeed, the Bells have incredible power in their local territories. Analysts say that if let into the long-distance business, the Bells could siphon 25% of long-distance revenues, or more, within five years.
UÿSÿWest said it has signed up 40,000 customers for Qwest since the service was launched Monday. "By filing this suit, AT&T and MCI and others are thumbing their noses at those consumers," said Solomon D. Trujillo, president and chief executive officer of UÿSÿWest Communications.
Mr. Nacchio also defended the arrangement. "Qwest and UÿSÿWest have come together to provide value and choice for customers," he said. "It's sad, but not surprising, that the major carriers are acting in lockstep to block the intent of the Telcom Act to stimulate competition."
The Bells so far have failed to get into the long-distance by conventional routes. While some state regulators have approved the carriers for long-distance entry, no Bell has satisfied the Federal Communications Commission, which must grant final approval.
UÿSÿWest was the last of the Bells to apply for long-distance entry in one of its home states. Ameritech, which sought Michigan's approval to offer such services in 1996, was the first.>>> |
