FTS to bundle telecom services
- By Michael Hardy
- Apr 07, 2003
As a preview of changes to come, the General Services Administration will soon enable agencies to buy local and long-distance telecommunications services bundled together, using the FTS 2001 contract.
GSA's Federal Technology Service is developing a contract modification that would allow some sellers to package their offerings together, said John Johnson, assistant commissioner of service development at FTS, in an interview with Federal Computer Week. Johnson also is FTS' acting assistant commissioner of service delivery.
The change foreshadows FTS 2001's successor, Networx, which will be awarded sometime before FTS 2001 expires in 2006. Networx is expected to fold the Metropolitan Area Acquisition (MAA) contracts that carriers use to sell local and regional services into FTS 2001, which governs governmentwide long-distance services.
In allowing the bundling sooner than 2006, Johnson said, FTS is mirroring changes in the consumer world and responding to customer demands. Under the current structure, carriers with MAA contracts can move some offerings to FTS 2001 using a crossover provision, but they have to market local and long-distance separately.
"I think it would be a step in the right direction" to allow bundling sooner, he said. "It simplifies how services are purchased. We thankfully have a contract vehicle that is flexible."
Johnson's intent matches trends in the commercial world, where vendors are rolling out bundled options in areas where they have Federal Communications Commission approval to offer both services, said Warren Suss, president of Suss Consulting Inc.
"This is their marketing and sales strategy, for ease of transactions, to have a single provider that can bundle things together," he said. "One thing that would be very attractive to federal agencies would be to bundle things together on a fixed-price basis."
In the past, long-distance was billed based on usage — time and distance — but flat-rate offerings are becoming more common as the cost to provide such service drops, Suss said. That removes one difference between local and long- distance that has made bundling difficult.
Many agencies still budget for the services from two sets of funds and may have to change that before they can take advantage of bundled offerings. For that reason, "there may be slower acceptance of it, but I think the time has come for bundled services," he said.
Telecom vendors will welcome the change, said Steve Lunceford, a Sprint spokesman. "As one of the few carriers that owns and operates local, long- distance, data and wireless networks, Sprint would welcome any moves that could help better present portfolio solutions to customers under FTS 2001."
"We're very supportive. We like it a lot," said Don Teague, vice president of federal sales at AT&T. "It lines up very well with our strategy. It gives agencies choices."
Meanwhile, work continues on Networx, Johnson said. During the next few weeks, he plans to meet with agencies to discuss the details of a draft program completed earlier this year.
The telecom world has changed tremendously since the MAA contracts and FTS 2001 were awarded in the 1990s. Voice and data services are converging, security has become a ubiquitous requirement, and regulations designed to make the landscape competitive are in flux.
The key players also have changed since the 1990s, and when Networx is issued, there will be a blank slate, Johnson said. No vendor will get a free ride from the old contract to the new one.
The convergence of voice and data is something officials have to consider carefully to make Networx truly useful, he said. "That's going to present to us a whole new operating paradigm."
Just as electric companies don't issue separate bills for lights, appliances and televisions, FTS should unify voice and data coverage to reflect technological advances, he said.
The General Services Administration offers two major contracts that cover most telecommunications services. More than 25 Metropolitan Area Acquisition (MAA) contracts, each centered in a major city, govern local services, while FTS 2001 covers long-distance services.
FTS 2001 was awarded in the late 1990s to Sprint and WorldCom Inc. The contract includes “crossover” provisions, however, that allow MAA vendors to add their offerings to FTS 2001 under certain circumstances. AT&T and Qwest Communications International Inc. have taken advantage of that provision.
To cross over to FTS 2001, an MAA contract holder must apply to GSA to offer specific services under the broader contract. Sprint and WorldCom both have revenue guarantees under FTS 2001, but vendors who are added later get no such benefit.