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GLOBAL TELECOMMUNICATIONS

One-Stop Shopping Is Hot Number

Competition: Firms large and small are going after California's huge local phone market by pitching comprehensive service.

September 09, 1996|KAREN KAPLAN | SPECIAL TO THE TIMES

Alan Stiffler is in the front lines of a nationwide battle over dial tones.

Dial tones?

That may remind you of the old line about selling every part of the pig including the squeal, but it's serious business. The Telecommunications Act passed by Congress and signed by President Clinton this year throws an estimated $90 million worth of local and toll call service--heretofore largely controlled by a handful of former AT&T Corp. spinoffs--up for grabs.

New competitors such as Vienna, Va.-based Cable & Wireless Inc., where Stiffler is director of local calling services, are expected to capture as much as 25% of the market over the next decade, according to FIND/SVP, a New York-based consulting and research firm.

That's put Stiffler, a trim 34-year-old with close-cropped red hair, on the road. For nearly a year, Stiffler has been crisscrossing the country to wage war against such competitors as the Baby Bells, which dominate the market for local telephone service; long-distance behemoths such as AT&T, MCI and Sprint; and cable TV providers.

On a recent Friday, Stiffler, a 4 1/2-year veteran of the company, presided over a meeting of sales associates at Cable & Wireless' Culver City office. His mission: To explain CWI's local phone strategy and fire up the 16-member sales corps.

"The No. 1 characteristic you have to have in order to survive is one-stop shopping," he told them. "Our customers want someone who can provide all their solutions in one place."

Stiffler has already made this presentation in New York, Hartford, Conn., and San Francisco, where Cable & Wireless is already selling dial tones to businesses. This meeting will be followed by a more detailed presentation of CWI's new calling packages. By the end of the month, sales will begin in Southern California.

"Right now, we're employees of a long-distance company," Stiffler said. "I'm trying to change that so we'll think of ourselves as a full-service telecommunications company."

He is hardly alone. The new federal law and a bevy of state regulations have lured scores of companies, big and small, into the market for local phone service.

Practically all of them are planning to emphasize one-stop shopping as they try to woo or retain local phone service customers. Internal surveys by some companies show that as many as 85% of businesses are likely to switch to a vendor that can provide a broad spectrum of communications services, including local and long-distance dialing, paging, cellular and wireless services, and even data and Internet connections.

"We're providing local service, local toll calls, long-distance service and Internet access in one package," said Larry Cox, a spokesman for GTE California. "Our customers are telling us that they want one high-quality provider of telecommunications services with a single monthly bill."

The local phone revolution is happening all over the country, but California's huge market makes it a key battleground. So far, 66 companies have been certified by the state Public Utilities Commission to provide service here, and many others have applications pending.

These companies will have almost immediate entree into the market because federal and state rules require the large incumbent local phone companies--in California, Pacific Bell and GTE--to sell phone time to competitors at wholesale rates. The buyers then "resell" the time to home or business customers at a profit.

Stiffler likes to point out that Cable & Wireless was the first company to resell local service in California. But that is only part of its long-term strategy. Eventually the company will install its own switches to route calls and lay its own fiber-optic lines so it can provide local service using its own equipment.

Other new competitors will be cable TV companies, which are relying on their own wiring networks to carry phone service. Tele-Communications Inc., for example, has set up TCI Telephony Services in Walnut Creek to offer dial tones to Bay Area residents and small businesses starting in February.

TCI is getting into the phone business in part to squeeze more money out of its underground coaxial cable lines. But it's also aiming to strike back at local phone companies planning to sell television via satellite, said John Stagl, TCI Telephony Services' director of technology.

As it happens, the cable companies do have to clear one important technological hurdle that doesn't affect their competitors: getting the phones hooked to their lines to ring.

"Cable lines have a tremendous capacity to carry information, but they really don't pass voltage," Stagl said. Since people count on their phones to work even during a power outage, engineers had to find a way to send power through the phone network instead of relying on electricity in a home or office. It took two years to devise a system with extra battery back-ups that pushes more voltage down the cable lines, he said.

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