Telecom Firms Need to ‘Get Real,’ Survey Says

Admitting you think like a monopoly may be the first step to recovery.

With telephone competition heating up, top executives at major telecommunications firms believe their companies think and act as if they are the customers’ only choice, according to a survey to be released today by consulting firm Deloitte Touche Tohmatsu.

That makes them poorly prepared to become “true market warriors,” Deloitte said.

“The accelerating pace of communications technologies, coupled with global regulatory trends, have turned a 125-year-old industry on its head in just seven short years,” the firm said about the findings of its poll of 108 executives, including 45 top officers at U.S. telecom firms.

But they don’t have their heads stuck in the sand, said Deloitte partner Phil Asmundson, who oversaw the survey.

“They recognize the problems and want to change their business, and that’s good news,” Asmundson said.

“They know what they have to do: serve customers and build new products for the future.”

Deloitte declined to divulge any names but said major Baby Bells, such as SBC Communications Inc., and major competitors, such as AT&T; Corp., were included.

“Whoever the survey team talked to was half a dozen years behind reality -- at least at Verizon,” said Eric Rabe, spokesman for Verizon Communications Inc., the nation’s largest local phone company.

AT&T; spokesman H. Gordon Diamond said: “We’ve been competing for some 20 years, so I don’t think a monopoly mind-set applies to AT&T.;”

Executives at SBC, California’s dominant local phone company, could not be reached.

Asmundson said even former long-distance upstarts -- Sprint Corp. and WorldCom Inc., for instance -- can suffer from the monopoly mind-set. That’s because they have to structure their businesses to compete with former monopolies and to adhere to government regulation, he said.

The survey found five universal areas of concern:

* Telecom companies are poorly structured for competitive markets, and many will have to move quickly to correct internal weaknesses in their operations and balance sheets.

* As technologies evolve, companies have to choose their product lines carefully. “Betting on the wrong horse could prove disastrous,” Deloitte said.

* Companies have to reduce debt, cut costs and develop “rational pricing strategies” rather than blame the economy.

* Customer service remains the Achilles’ heel of the industry. The majority of respondents said they needed to improve every facet of customer support, from billing and repairs to more sophisticated “business intelligence” about what their customers want and need.

* Though 85% of respondents blamed regulation for hurting their businesses, Deloitte said such complaints were “largely irrelevant....Like death and taxes, regulation is going to be with us forever. It is well past time that operators ‘get real’ about regulation.”

Diamond and Rabe said their companies already had made changes to compete better.

Diamond said AT&T; had drastically reduced its debt, streamlined management and improved efficiency. It also is spending $500 million this year to improve customer satisfaction through such measures as simplifying contracts, slashing the time it takes to set up service and improving billing accuracy.

Rabe said Verizon, too, has significantly cut debt while restructuring after the merger of BellAtlantic and GTE Corp. and the name change to Verizon. The company owns the leading wireless company.