BELL ATLANTIC DEAL SEEN HAVING GRADUAL IMPACT ON BROADBAND SERVICES
by Reed Miller, Editor, Broadband Networking News
The merger between Bell Atlantic [BEL] and GTE [GTE] is likely to have an impact on the market for broadband services, but it will be gradual.
"One of the things that Bell Atlantic and GTE are aiming at in this merger is to eventually be able to offer T-1s and frame relay service across [local access and transport areas]," says Rick Malone, principal of Dedham, Mass.-based consultancy Vertical Systems Group. "GTE operates in California, Texas, Florida, the state of Washington and states in the Midwest, and GTE has its own backbone between these locations. This backbone could be used for long-haul T-1s and frame relay service, once regulatory hurdles are taken out of the way for the companies.
"What GTE and Bell Atlantic are betting on is that once they prove [competitive local exchange carriers] are competing in their territories, they will be able to offer data services that cross the country."
The ability to offer long-haul frame relay and T-1 services would put Bell Atlantic and GTE in competition with AT&T [T], MCI [MCIC], Sprint [FON] and other interexchange carriers.
Graig Johnson, principal analyst at the PITA Group, a consultancy based in Portland, Ore., believes the merger could have a downward effect on pricing for frame relay service and T-1s. "All of the carriers are targeting the business customer with T-1 and frame relay services, so prices are already dropping," Johnson says. "But if Bell Atlantic and GTE begin using GTE's territories as a jumping-off point to offer T-1 and frame relay in other Bell operating companies' territories, it could accelerate the downward pricing trend."
Malone does not believe the downward pricing trend for frame relay services and T-1s will be accelerated. "Both Bell Atlantic and GTE are the dominant [local exchange carriers] in their territories, so they have an incentive not to see prices drop too rapidly," Malone says. "If the carriers do enter new markets, they are likely to undercut their competitors' prices by small amounts."
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