Tech Industry

Bell Atlantic leads a local revolution

When the head of one of the nation's largest phone firms dismisses ordinary telephone service as becoming "incidental," one can be sure a telecommunications revolution is underway.

NEW YORK--When the head of one of the nation's largest phone firms dismisses ordinary telephone service as becoming "incidental," one can be sure a telecommunications revolution is underway.

Chief executive Ivan Seidenberg is reconfiguring his company to such an extent that Bell Atlantic's new national wireless and data focus may overshadow its primary local phone business in a few years, he said in an interview with CNET today.

This vision is not unusual, as telecommunications companies move toward offering advanced services and dabbling in fields outside their traditional expertise. The long distance and local phone companies--AT&T, MCI WorldCom, SBC Communications, and others--are striking deals left and right while planning integrated packages of voice, video, and Internet services to better compete in the market.

Unlike AT&T, which seeks to establish a national local phone network, Bell Atlantic aims to push its wireless and data interests, but not necessarily its local phone business, outside its regional boundaries. Yet federal regulators could keep the Bell's nose to its local grindstone, as they have already required SBC in its merger with Ameritech to expand its local service in 30 markets outside its region.

Under Seidenberg, Bell Atlantic has been a deal-making powerhouse, sealing a merger with GTE, which owns local phone properties in 40 states and has a thriving national data business. The Baby Bell also agreed to create a joint coast-to-coast wireless phone venture with recently merged Vodafone AirTouch.

Today Bell Atlantic said it would take a stake in Metromedia Fiber Network, a fiber-optic firm that will give it access to high-speed data networks in metropolitan areas. This follows its application to the Federal Communications Commission last week to offer long distance service in New York--and analysts believe it will be the first successful bid by a Baby Bell.

At the Internet World '99 industry trade show, CNET asked Seidenberg about his company's expansion plans and about the consolidation wave that is sweeping across the telecommunications industry.

NEWS.COM: Will you use today's Metromedia investment to expand outside of your home territory?
Seidenberg: There are a few things that Metromedia helps us do, such as follow our multinational customers to other cities. To the extent our customers are out of region, we will serve them. Remember, GTE already offers service in 40 states around the country.

Will the company offer customers voice service in new regions in the United States, the way SBC Communications has promised to do?
I think voice becomes incidental to data. We're really focused on building a national wireless presence, a national data presence. I think in three to four years, voice becomes incidental to that.

Will the merger between Sprint and MCI WorldCom affect Bell Atlantic's business at all? Will you have to grow your business to compete?
[Sprint and MCI WorldCom] is an expected move, a response to the industry in general. But in this particular case, I think a few things need to be looked at very carefully. One of those things is the timing of this--the assumption that this could happen and be approved before Bell Atlantic is able to offer long distance is disturbing. And the consolidation of Internet assets before we can offer long distance is unthinkable.

Are there other acquisitions you need to make?
I think there are places in the business where we continue to build scale. We need to build by getting into the long distance markets.

On wireless, look where we were with respect to wireless assets. Now we've done that deal [with Vodafone AirTouch]. But wireless data is now a brand new market. This is a never-ending mosaic.

Do you need to acquire wireless data companies, then?
I'm not sure there are any wireless data companies out there that are ready. But wireless data is going to be fun. It's going to be the same things that we saw driving the voice wireless market over again.

Bell Atlantic has previously been very interested in convergence of voice, data, and video, with an early focus on interactive TV. Do you still see the company interested in that space?
Our focus is really more on the network side. Our strength is to bring the technology out, add network services, and all of the things that go along with that.

The difference today is that back then it looked like the telephone industry was moving toward the cable model. Now we're applying the Internet model. We've really skipped going through the cable model. You see those companies offering subscribers 100 or 500 channels or so. Bell Atlantic's role will be more on the Internet side, offering access to the Internet.

Is the government, and particularly the FCC, helping or hindering the introduction of broadband services?
It's not helping. But that's inadvertent, I think. If you go to Wall Street, you find that companies that have light regulation or no regulation are valued higher. Those of us that carry lots of old regulation have constraints. You can see what MCI WorldCom, with its high-flying stock, is able to do.

Some Bell companies, like US West, have complained that Wall Street hasn't valued them as highly as start-ups, even though they have similar high-speed Internet technology. Do you feel the same way?
What we've learned is that if the Street perceives things one way, all the whining in the world isn't going to make it any different.

The Street said a year ago we needed to fill out our wireless footprint. We tried, and couldn't do it then. But now we have. The issue is, you can't complain about not getting credit for something. You just have to go out and do it.