Telecoms dial up changes

The ever-shifting telecommunications landscape is still in flux, and recent events have the major firms rushing to adjust and rework their long-term plans. Agencies can expect advancing technology and a wide range of vendor choices in the years to come, according to the companies and industry analysts.

Some of the changes are among the companies themselves. WorldCom Inc., its future uncertain in recent months, now looks poised to emerge from bankruptcy, stripped of most of its debt and ready to fight, under the name MCI.

Over at AT&T, former government solutions president Chris Rooney has been tapped to head the company's newly unified sales team as part of a broad restructuring. The move brings Rooney's considerable federal experience into a companywide position of influence but opens a still-unfilled vacancy at the top of the government division.

Other changes are going on in federal agencies. General Services Administration contracts that govern local and long-distance service are only a few years from expiring, and GSA's Federal Technology Service is working to develop replacements.

Keeping up with the telecom world is a challenge for FTS, said its commissioner, Sandra Bates. If telecom regulations change while work on a contract vehicle is under way, the agency may have to back up and start over, she said. And the telecommunications industry itself is tumultuous. Long-distance providers that didn't exist when the FTS 2001 contract for long-distance services was awarded in the late 1990s will be solid competitors by the time its follow-up vehicle is opened to bids.

MCI, formerly WorldCom, has been one of the more tumultuous firms. The company filed a reorganization plan last month and is making competitors nervous. Although the firm's well-publicized financial woes and admissions of inflated revenue figures made it controversial in recent years, it held its place on GSA's FTS 2001 contract and continued to do business.

"Coming out of Chapter 11, they're going to be very strong in their traditional core network services, even managed network services," said Warren Suss, president of Suss Consulting Inc. "This is a continuation of the clash of the titans. I think they're over the hump in terms of the market perception of risk."

"The competitive nature of the business is such that as long as they meet the financial requirements, they're a bidder as well as anybody else," added consultant Frank Dzubeck, president of Communications Network Architects Inc. "They especially tend to be a strong player in the managed services space and they intend to be a wholesaler."

MCI believes it has a solid reputation despite its woes, spokeswoman Natasha Haubold said. "MCI has a long history of working with our government customers. We have provided a number of highly complex, highly secure, highly reliable solutions for them," she said.

Rooney's promotion has sparked speculation about AT&T's potential power in the federal market. Although his new position obligates him to care for the company's commercial customers too, it gives the company an experienced government perspective at a strategic level, Suss said.

"So, Rooney moves up and it means you have somebody at the most senior levels who can make the case for initiatives for what it takes to win in the federal market," he said. "In many organizations, the federal division tends to be a stepchild. Having Rooney at that position will be very good for AT&T."

AT&T announced Rooney's elevation in April, but his successor has not yet been named. Senior managers Don Teague, Tony Cira and Lou Addeo are all candidates.

Rooney, a former Marine Corps officer, came to AT&T last year after 14 years with Sprint followed by stints with a couple of start-ups. He said he has learned lessons in both the federal and commercial sides of the business that can be applied to the other arena.

The company is developing voice-over-IP technologies, which Rooney said respond to the need within both federal agencies and commercial firms for converged voice, video and data services. The work is a long-term commitment to the technological approach, he said.

"In a broad sense, IP technology in general is certainly the preferred way forward. That journey is well under way and a lot of our managed service is there," he said. "Is it something that's going to streak through the market in '03? No. Is it something that will be dominant in 10 years? We think so."

Verizon Targets Data Services

The telecom providers are trying to establish differences among themselves so buyers won't think of them as being all the same. Verizon Federal, only about two years old, has "some real aggressive plans for growth in the federal space," said Shelley Murphy, vice president of federal markets for the company.

"The competitive space is fierce and probably getting more so," she said. "We're coming from a position of reasonably good strength. The other side of that is we have competitors who are likely to soon be almost debt-free on their balance sheet and able to compete even more aggressively on price."

Murphy, who had been with GTE Corp. before the GTE/Bell Atlantic merger created Verizon, took over the federal division following a company-commissioned study by Booz-Allen Hamilton to advise Verizon on boosting its federal presence.

"We now have a dedicated vertical marketing team and we've established a business development function," she said.

The company's federal strategy is partly influenced by its Federal Communications Commission clearance to offer long-distance service in every state but Alaska.

"We're targeting data services as a strategy. In the federal space, continuity of operations is something many of our customers care about. In the past, we have not been able to follow them to offer full service," she said. "Now we are end-to-end."

The company has spread its federal organization into locations nationwide, to expand its influence with customers who are not based inside the Capital Beltway. She has also made sure the company's services are available through a number of multiple-award contract vehicles, so agencies will have few difficulties buying them.

"No successful organization is ever static. You're always reacting to changes in the marketplace," she said.

Sprint Banks on Changes for Growth

Sprint's government systems division has kept a close eye on all aspects of its environment, from its fellow telecom providers to its government customers and the policy- makers, said Anthony D'Agata, vice president and general manager of the division.

By making the right moves at the right times, companies can gain from any manner of changes, he said.

"Business has been very good for us, and in fact is growing at a fairly dramatic rate," he said. "We've acquired a significant amount of business from distressed carrier takeaways, in the hundreds of millions" of dollars.

The Homeland Security Department has brought some business to the company, and agencies in general are migrating toward managed security solutions, D'Agata said. Those trends also stand to benefit Sprint.

The company a few months ago created a branch within its government services division just to focus on homeland security, he added.

Sprint counts on its financial stability and its own network to set it apart from competitors, D'Agata said. To be a viable competitor, he added, a company has to stay responsive to world events.

"What we haven't seen yet, although the whole world anticipates it, is as they begin to rebuild Iraq, there's going to be a need to improve the infrastructure of that country," he said. "Our government is likely to play an active role in that infrastructure improvement."

Newer players in the federal telecommunications space, such as Qwest Communications International Inc., are trying to stay nimble and build their market presence. At Qwest, new Chief Executive Officer Richard Notebaert has been meeting with customers to gauge their needs, said James Payne, senior vice president of the company's government systems division.

"One of the most discernible advantages we at Qwest have is that we're very hungry and very aggressive. But we remain extremely flexible," he said. "We're willing to be the prime [contractor] or the" subcontractor.

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