Utilities

Retooling telecom: As rivals proliferate, SBC taps executive to overhaul offerings

October 10, 2005

Few industries have been as overrun by competitors as the Baby Bells-SBC Communications and other phone companies created through the breakup of Ma Bell AT&T in 1984.

The San Antonio-based owner of what used to be Indiana Bell now competes along with local telephone exchange carriers that have carved out an estimated 20 percent of residential service in the state.

Lately, cable TV companies such as Comcast have offered phone and broadband over the same, old coax cable that carries "Laverne & Shirley" reruns. And electric utilities, such as South Central Indiana REMC in Martinsville, offer highspeed Internet service, via ordinary household electrical wiring.

Not even SBC's bionic clout in the Indiana Legislature can deflect all competitors' torpedoes.

"Consumers move around a heck of a lot more than in the past," said Hardmon Williams III, tapped by SBC last month to the newly created position of vice president/general manager of consumer markets for Indiana.

The Indianapolis native who most recently worked for SBC's Chicago operations has to figure out how to keep 1.5 million customer accounts from fleeing and to get them to buy additional services. Improving customer service and tweaking product offerings are his primary focus.

"There is competition, but my interest is not to be overly focused on what competitors are doing. I want to be maniacally focused on what consumers want," said Williams, 35.

In his first few weeks on the job, Williams has donned a headset in SBC's Indianapolis customer service center, taking copious notes on what consumers want.

One thing he's learned so far is that some consumers who want to try SBC's digital subscriber line, or DSL, Internet service don't want to subscribe for a whole year to get the promotional $15-a-month price. Look for changes in terms as early as next month.

Some customers who want to sign up for multiple services tell customer service reps they want everything on one bill-no problem there, because SBC already bills that way. But it shows that "so many customers are looking for simplicity and integration," he said.

Williams wears an impeccably crisp suit and has the relaxed poise of a TV talk show host. It doesn't seem he'll have a problem picking the brains of Hoosiers in a series of focus group sessions he plans for the months ahead.

"There's nothing better than the spontaneous listening to customers," he said.

Inventing a new widget is not Williams' goal. SBC already has standard fare in the business these days-including broadband, long-distance, wireless (through a 60-percent stake in the nation's largest wireless carrier, Cingular), and a partnership with Dish Network for satellite TV.

"The components of the portfolio are relatively full and meet the needs of consumers," he said. "My intent is to find out what pricing parameters, any technical modifications, enhancements, derivations-that will be my focus."

Clever bundling will be key. In a June report on SBC, Smith Barney analyst Michael Rollins said the company appears to have substantially lower turnover among customers who have its DSL Internet service than those who do not. SBC services 5.6 million DSL lines, the most of any telecommunications provider in the nation, according to McDonald Investments Inc.

Offering multiple services for a bundled price "will slow down the rate of erosion in serviced access line losses as well as increase subscriptions for other services like DSL and long-distance," McDonald analyst James Raith said in a July report.

Where are customers going?

"The cable TV guys represent the biggest competition on the horizon because of their data [Internet] services," said Michael Arden, an analyst at ABI Research of Oyster Bay, N.Y.

Arden also notes that cable companies have been getting aggressive in offering phone service, through what's known as voice-over-Internet protocol, or VOIP.

But SBC and other Bells also are losing customers to wireless.

Rollins estimates that 2.8 percent of homes passed by SBC move each year to either cable or wireless for their primary phone service. The analyst said wireless revenue at Cingular remains the principal source of growth, plus revenue from DSL.

SBC hasn't given up on the phone line, however. By the end of 2006, SBC plans to roll out in Indiana something called IPTV, short for Internet protocol television.

IPTV is possible thanks to a huge investment in fiber-optic cable, which SBC has been installing in neighborhoods and, in some cases, right up to the doorsteps of homes.

IPTV will be capable of video, Internet and phone service-all simultaneously-and can be connected to any number of home devices, from TVs to PCs to PDAs.

The service will include a digital video recorder and will allow for switching between camera angles of baseball games and multiple picture-in-picture displays. IPTV also can interface to a wireless phone, which can be used to set up recording.

The amount of data that can be transmitted is substantial-about 20 megabits per second vs. up to 3 megabits per second for current DSL.

SBC lobbyists have been toting a DVD player with a demonstration disc on IPTV into offices of legislators. The company is likely to again press the Legislature for relief from Indiana Utility Regulatory Commission oversight, in return for its new investment.

A bill that would have phased out price controls on business and residential wire line service died in a conference committee during the last session.

Beyond packaging, Williams hopes to keep and grow market share by improving customer satisfaction-ironically, perhaps -by harkening back to those days when life was much simpler.

"SBC has tremendous legacy to the Indiana customer base, through Indiana Bell," he said.
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