Payne leads fed Qwest

The resignation last week of Jim Payne from his job as Sprint's assistant vice president for FTS 2001 and his re-emergence as chief of the federal division at Qwest Communications International Inc. signals the beginning of a significant change in the federal telecommunications market, observers said.

Just as the government's FTS 2000 contract award in 1988 marked the beginning of Sprint's growth into a major telecom service provider, observers see Qwest's hiring of Payne as an opening act in the company's plan to attract federal business and become a major player on the level of AT&T, MCI WorldCom and Sprint.

And as the regional Bell operating companies begin to enter the long-distance market, vendors will be fighting tooth and nail for the privilege of serving federal agencies, analysts said.

"There's a strong bunch of companies trying to come up," said telecom analyst Frank Dzubeck, president of Communications Network Architects Inc. "And the only beneficiary of all of this is the customer—the federal government."

Payne last week began working at Qwest as the company's senior vice president for government markets. A company spokeswoman said Payne will direct the company's sales and marketing efforts at the federal level and oversee the operations that support Qwest's current government customers.Although Qwest's share of the federal market is small, the company has scored a couple of coups recently. The Treasury Department selected the company and Sprint this year as service providers on its Treasury Communications System (TCS), and Qwest last year was awarded a Defense Department contract for a $430 million virtual private network.

Industry sources speculated that the company brought Payne in to market its TCS contract within Treasury and other agencies as an alternative to the governmentwide FTS 2001 contract, recently awarded to Sprint and MCI.

Federal telecom users last week acknowledged that they did little if any business with Qwest but had at least considered using the company in the past. "We're constantly looking at transport providers, and Qwest is obviously one we are looking at," said John Johnson, DOD's FTS 2001 transition manager. "I know we have dialogue with Qwest quite often."

Payne said that Qwest was giving him carte blanche to put together a long-term strategy for tackling the federal market. He said he hoped to diversify the company's federal business into more civilian agencies and double the size of his staff by the middle of next year.

Payne drew parallels between his arrival at Qwest last week and his first days at Sprint 13 years ago, when he was part of an eight-person division. That organization hit the jackpot with the FTS 2000 award, and Payne hopes a similar fate accompanies Qwest's federal business.

"I think by hiring me, Qwest is saying it is no longer [just] dabbling in the government market," he said. "My moving is a signal that it is time for the next tier of telecommunications providers to step up to the table and dramatically change the landscape."

Payne's departure came at an inopportune moment for Sprint. Don Teague, who served as vice president and general manager at the company's Government Systems Division, left the company in June.

Dick Coyle, vice president of federal marketing at Focal Communications Corp. and a former Sprint employee, expressed the confusion that many federal telecom insiders share regarding the defections: "I really do wonder what kind of signal Sprint's leadership is sending to the market they want to capture," Coyle said.

Others in the industry questioned whether Teague's and Payne's departures were the result of internal turmoil at the company resulting from what some at Sprint reportedly viewed as an excessively low bid on the FTS 2001 contract. Payne and others in the company flatly denied that either resignation had any connection with the FTS 2001 bid.

For their part, Sprint's FTS 2001 customers have admitted feeling concerned about recent events."There's always concern when there are senior management changes at a corporation," said Johnson, who announced earlier this year that Sprint would handle DOD's frame-relay traffic on FTS 2001. "But we have been assured by Sprint that they are committed to seeing [that] our transition goes smoothly. I'd say I'm guardedly optimistic."