Equal Access Voting Ends Sunday : AT&T; Finishes as Favorite in Long-Distance Balloting
Most of the nation’s phone customers finish voting for their favorite long-distance company on Sunday, and it’s AT&T; in a landslide. But some strong new candidates are getting ready to throw their hats in the ring.
Sunday is the deadline for the seven regional Bell operating companies to convert most of their customers to “equal access.” That means that customers can reach the long-distance carrier of their choice--not just AT&T--by; dialing 1.
Market researchers estimate that American Telephone & Telegraph held onto about three-quarters of the roughly $32-billion interstate long-distance market in spite of the 18-month free-for-all balloting that went along with the equal access conversion.
With balloting almost complete, AT&T; has about 75.7% of the interstate long-distance market, estimates the Yankee Group, a Boston-based telecommunications consulting firm. MCI Communications has about 7.4%, US Sprint Communications about 4.3% and all others 12.5%, the Yankee Group says.
AT&T; Big in Business Market
Moreover, AT&T; has about 90% of the business of the biggest corporate customers, which are where the big profits are made, and may actually be increasing its market share there, said Jerry Lucas, president of TeleStrategies, a consulting firm in McLean, Va.
Strong marketing, a reputation for quality and sheer inertia were AT&T;’s biggest assets in overcoming the lower prices of its rivals, analysts say.
“There was one school of thought that AT&T; would retain (its) vastly dominant market share. There was another school of thought that AT&T; would be creamed by equal access. It was more like the former than the latter,” said Kenneth Bosomworth, president of International Resource Development, a consulting firm in Norwalk, Conn. “AT&T;’s far from being in trouble. In fact, they’re in a very good position,” Lucas said.
That doesn’t mean that the phone giant can afford to take it easy, however.
AT&T;’s next challenge will be to stave off long-distance competition from its Baby Bell offspring on one hand and International Business Machines on the other, some forecasters say.
Some of the seven Baby Bells are clamoring to provide certain kinds of interstate long-distance service, from which they were banned under the 1984 consent decree that broke up the Bell System. The Bell offspring are getting a more sympathetic ear lately from regulators and Congress, at least to resell space on the networks of AT&T; and the other long-distance providers.
IBM, meanwhile, is mounting a challenge to AT&T; in the coming “information age,” in which computers and telecommunications are merging, Lucas said.
Faces Huge Writedown
AT&T; is moving toward smart phone switches, which contain computer software that provide customized services for big corporate customers. But IBM is trying to pull the big customers in the opposite direction, putting all of the intelligence into IBM equipment on the customers’ premises and treating the long-distance circuits and switches as plain commodities.
“The biggest challenge for AT&T; will be to compete with IBM,” the world’s biggest computer company, Lucas said.
Meanwhile, AT&T; faces a shake-up as dramatic as the Bell System breakup, probably in the early 1990s, when it has to take a huge writedown on its investment in switches, possibly as high as $40 billion, as a glut of long-distance capacity emerges, Bosomworth predicted. The glut will occur when advances in fiber optic technology makes it possible for existing fibers to carry as much as 100 times as many calls as they do now, Bosomworth said.
“We’re talking about the economics of the industry really getting scrambled over a short period of time,” he said.
Equal access voting was ordered by the Federal Communications Commission and began in Charleston, W.Va., in 1984. By Sunday, 70% of the lines served by the regional Bell companies and about half of the lines served by other local phone companies will have been converted to equal access.
