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Communications of the ACM

Communications of the ACM

Staying Connected: Telecom Act, Scene One

The phone rings constantly. I get lots of mail. And telecommunications companies of all shapes and sizes, from all geographical areas, want me to be a member of their special customer family. I've been chosen. And I'm honored, really. In fact, so much so that when Bob T. calls me from the MCI WorldCom family and asks me to drop Bell Atlantic like a hot potato to get bigger, better, and cheaper service from MCI WorldCom, I decide that I'll trust good old Bob T. and make his day by agreeing to switch.

It's a tough switch, really, as I've been a Bell Atlantic customer my entire life. Well, actually, make that a Nynex customer first. But then Bell Atlantic gobbled up Nynex for almost $26 billion and the family I belonged to was called Bell Atlantic Nynex. But then, one day, Nynex was gone, so I was part of some dysfunctional Bell Atlantic-only family, but it was the only telecom family I knew. So I stayed. I didn't have much of a choice because no one was calling me during dinner to invite me to join their special customer family.

But that was a long time ago, before I was popular. Before the Telecommunications Act of 1996. Before I spoke to Bob.

I figure it can't hurt to see what all this "competition" and "convergence" and other buzzwords that fly through the industry like pesky insects really means. So, interrupting my teriyaki chicken dinner, I tell Bob T. to sign me up. Bob sounds mildly shocked that I have agreed to his offer—without even bothering to hear out his memorized two paragraphs of solid salesmanship.

The Telecom Act of 1996 has opened the floodgates of competition. And yes, I understand some competitive local exchange carriers (CLECs) are now able to grab business and customers from the Baby Bell companies that have acted like quasi-monopolies since the breakup of Ma Bell. Competition is supposed to keep our telephone company honest. And better yet, it's supposed to bring the costs down. So yes, I tell Bob T., sign me up for local service and we'll both be part of the MCI WorldCom family.

While I'm quite sure you're just as popular, getting calls and correspondence from your friendly provider trying to entice you to join the "family," the phenomenon may have gone unnoticed. Just in case it's passed your attention, there's a major convergence revolution going on. While these service providers have first gone after the more lucrative business customers, who have started to profit from competition, the hunt is also on for lucrative residential customers—and that means you.

MCI WorldCom, mind you, is probably the best example of what this new telecommunications culture of competition is all about. After all, MCI WorldCom, steered by fearless leader Bernie Ebbers, was a scrappy CLEC once. Yet it was able to buy up MCI Communications, the number-two long-distance company, in a $37 billion move that signified the ferociously competitive and increasingly unpredictable telecommunications market. Wall Street started to notice. Soon multibillion-dollar deals were being announced almost weekly. These deals were breaking down the walls of telecommunications. Companies were no longer confined to just serving up local calls; there were companies that wanted to put all that telecommunications had to offer—local, long distance, Internet, and wireless calls—on one bill. These companies were fired up to grab a slice of the $100 billion local services market.

Venerable telecom companies are spawning Internet services whose subscribers and revenues are shooting up faster than Starbucks coffee shops.

And the stock market ate it up, giving these new companies center stage. This was no longer "hold on to AT&T for 50 years and get a dividend"-type investing that your grandmother did (although Grandma always did know best, and did pretty well if she had bought the stock years ago). AT&T changed gears and jumped into the fast lane, fighting against its title as telecom dinosaur, investing instead in growing communications sectors while licking the wounds of other sectors losing ground to competing companies and technologies—like its traditional long distance. AT&T is not alone in enhancing its communications menu. Venerable telecom companies are spawning Internet services whose subscribers and revenues are shooting up faster than Starbucks coffee shops.

While the Telecom Act was initially surrounded with hype and hot air from Washington, DC—and some cynicism in the industry—its effects are slowly and surely seeping into our everyday lives. Aside from the Telecom Act, communications itself, from the hyperventilating progress of technology, has undergone such a radical change in the past few years. Remember when you used to return from lunch and there would be four pink slips sitting on your desk, detailing your missed calls? Can you recall the frustration of digging in your pockets looking for a dime to plunk into a payphone—if you could only find one that worked? Imagine back in the day when your Aunt Bessy used to lease a telephone from AT&T, the only game in town, and pay a monthly fee for the privilege? Can you even recall life before the Internet, when "mail" came from a human in a U.S. Postal Service uniform?

Well, like the one-hour lunch, most of these bygones of telecommunications past are long gone. Pink slips have been replaced by voice mail. Pay phones are being displaced by wireless phones. And AT&T knows only too well it's no longer the only game in town.

And that's just for starters.

The Internet, which began as a way for educators to communicate in basic form across different campus networks, is the biggest component of the communications revolution. Researchers say that while today one in four households surf the Net, by 2000 that number will be closer to one in three. Consumers will spend $56 billion on Internet access services over the next five years, according to market researcher the Yankee Group in Boston. And these new service providers are lining up to bite off a slice of that pie. There's other changes as well. Today, high schoolers research term papers on the Internet rather than encyclopedias and carry beepers to communicate with their friends and family. Phones in every shape, size, and price range are sold at the local store. Services above and beyond voice calls, like data calls for accessing the Internet, are being offered by CLECs. Email has become a staple of everyday life. The revolution includes the continuing tidal wave of mergers and acquisitions that help expand a company's portfolio.

Maybe now your cable operator is offering telephony services. (Look at AT&T buying up cable company TCI Communications, and making a cash and stock offer estimated at close to $59 billion on MediaOne Group.) And culture is changing, too. When was the last time you were at a restaurant and didn't see someone on a cell phone? Perhaps you've even unplugged your landline phone in favor of choosing your wireless phone as your only phone. You wouldn't be alone. According to the industry trade organization Cellular Telecommunications Industry Association, there are almost 70 million wireless subscribers—almost 10 times the population of New York City—in the U.S. alone. Some of these wireless customers have left their landline phones for good. Now that's convergence. Even the conservative utility company is trying to lean into the big-bucks business and springboard off the Internet. Take for example California-based, an Internet utility company that lets customers order and pay for their electricity over the Web site. Now, like discount long-distance providers before them, they want to match low rates with savvy penny-pinching customers tired of money-hungry monopolies. It's almost like trading watts like pork bellies.

So that's what they mean by convergence—the walls breaking down into a business mosh pit where anything goes.

But the problem is these new players in the market spell confusion—and lots of it—for us, the consumer. There are access charges, taxes, different bills, different service providers on your bill, being "slammed" (your service provider is changed without your consent). These are just some of the ills that accompany this new era in communications.

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An Element of Surprise

Take for instance my experience with my new extended family, and my new pal, Bob T. I was happy for a few days. I dialed and talked and dialed and talked without worry. Then my bill came. It was $150, which included my intralata, local calls, and long-distance calls. There must be some mistake. Under the plan that had Bell Atlantic as my local and MCI WorldCom as my long-distance carrier, my bill was half that. I was being charged more than 12 cents a minute per call in my local area. My ex-telecom company never would have treated me this way; they charged me on average 7 cents (and said so on the personalized bill). I called MCI WorldCom. But suddenly, no one was on a first-name basis with me. They asked me if I knew about the Telecom Act, about convergence and competition. And did I know I had agreed to switch services. Yes, I said, I know all that, but I never agreed to pay more for the privilege of being part of this new family. Can I talk to a supervisor? No, the supervisor will not speak with you, said the anonymous voice who would only identify himself as a customer service rep. But my bill is making me cry! Someone's got to help. Finally, after three callbacks and a raised tone of voice, a supervisor magically sounds on the line. ...Yes, there was a discrepancy in the bill. The pricing was incorrect.

... You didn't ask for the discount, did you? (I was guilty as charged.) The sales person you spoke with in the first place never put in the promotional discount that would have taken $25 off your bill. It will be rectified... I feel betrayed. Maybe even a little bitter. I want my old telecom relationship back. It will cost me $10, but I'll get credited down the road.

The other night while eating dinner, the phone rings. "Good evening, Ms. McGinity," a voice says on the other side. "This is Jesse from ABCNet. We'd like to offer you a great deal tonight on our new Internet service... "

My lip quivers and flashes of the Telecom Act and how competition is all going to make it better and bring us to a place where communications does our job better and makes our life easier. But before I can give Jesse a logical answer, three words spill from my lips... "What about Bob?"

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Meg McGinity ( is a senior editor at She welcomes feedback.

©1999 ACM  0002-0782/99/0700  $5.00

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