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Technology Stocks : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: bucky89 who wrote (51612)	8/4/1998 8:59:00 PM
From: Raj	Read Replies (2) \| Respond to of 61433

>>What makes him think QWEST can steal AT&T's customers? There are switching costs, including switching out the local loop. AT&T is a known commodity and has established relationships. QWEST is a ??? Sure, they will win some business, but only by aggressively offering discounts. But they won't kill AT&T IMO.<<<< Qwest bought LCI to get access to the edges. I don't think that they will stop there. In any event that (edge topology) makes no difference to their highly efficient, high bandwidth IP backbone. They can haul voice traffic at a fraction of the cost of ATA&T class4 circuit switches. Geting the edge traffic onto their IP backbone does not necessarily translate into voice on layer 2.

To: bucky89 who wrote (51612)	8/8/1998 5:43:00 PM
From: Jack Whitley	Read Replies (2) \| Respond to of 61433

<<Paul Johnson's recent remarks about QWEST and AT&T kind of give me a chuckle. I like him, but I think he's wrong here. AT&T has the customers, and QWEST doesn't. What makes him think QWEST can steal AT&T's customers? There are switching costs, including switching out the local loop. AT&T is a known commodity and has established relationships. QWEST is a ??? Sure, they will win some business, but only by aggressively offering discounts. But they won't kill AT&T IMO.>> bucky89, In this area (and only this area) I would somewhat disagree with you. Retail individual customers can change LD services very easily, and it will be even easier to change going forward. The impetus to do so on a widespread basis, based on large "everyday" price differences, has not been there, but it will be. If Qwest can offer 5 cents vs. 10 cents (and even lower), goodbye AT&T retail consumers (in droves). Remember, AT&Ts revenue is 90% long distance. AT&Ts choice will be to cut rates (and their margins) to the bone (or capitulate into ATM backbone sharing arrangements with Qwest and others, and lay off lots of employees). This brings us to the business customers. My company switched from AT&T to MCI about 2 years ago, after having been with AT&T for years. Our (voice) call volumes started growing about 30% compounded annually in 1993 to the point that we are now billing close to 1 million minutes per month. In terms of monthly billing, we were one of the larger, faster growing customers in our territory for AT&T. Regarding your remark about AT&T's "established relationships", the only relationship we ever had with them was at contract expiration, and they brought 5 people to that meeting, 4 of whom didn't speak and I never saw or heard from previously or after. We anticipated LD rates declining and wanted a 1 year deal, they insisted on 3. We contacted MCI, and did a deal. Now MCI has to justify their rate to us yearly, and if they don't keep them coming down based on what we know about MCI/Worldcom's ATM plans, we will switch again. Even given our volumes, the delta between our new rate, and what rates will be for business, is very wide. That delta is going to narrow very quickly in the next 2 years and companies that take advantage of the narrowing are going to make more profits and beat their competitors, and I truly do not know if AT&T is nimble enough to not get choked. It is very easy to switch and we get more choices as more companies build out networks. We contacted AT&T again, they still want a 3 year committment. So I would not attach too much value to their "established relationships". I am like you, when you read the statement "AT&T could be put out of business" it SOUNDS unlikely, but they are not the only game in town any more and they are truly going to have to radically change the way they think about and deal with customers (both individual and business), or they are going to go down under the weight of their non-producing overhead and older technology. Really. The gov't would be the only thing that could keep them propped up. In a big way, companies like ASND are putting tremendous pressure on AT&T to behave like they are competing, not the 800 pound gorilla they used to be. Its not a given that they are going to (or can) change fast enough, Micheal Armstrong not withstanding. jww