Nevada Bell parent pushing for eased oversight

Kalpana Srinivasan

Friday, June 8, 2001 | 11:29 a.m.

WASHINGTON -- Ed Whitacre may rank as the dean of telephone executives.

At 59 he's already put in 38 years at SBC Communications Inc., watching it grow from an outpost in AT&T Corp.'s national telephone monopoly into the telecommunications empire he now heads.

SBC's empire includes Nevada Bell, provider of local phone service in Nevada outside of Las Vegas. SBC also runs Cingular Wireless.

Whitacre, SBC's chairman and chief executive, was still in college when he went to work for Southwestern Bell in 1963 as an industrial engineer in Lubbock, Tex.

The smallest of the Bell phone companies splintered from AT&T in 1984, SBC has grown through acquisitions to become the second largest local phone business in the country. The last major deal under Whitacre's stewardship was completed in 1999, when SBC scooped up Ameritech Corp., the Chicago-based Bell company that provides local phone service to most of the Midwest.

These days SBC is aggressively building out its high-speed Internet services via DSL, or digital subscriber line, and trying to meet federal requirements so it can offer long-distance service throughout its 13-state region.

Like other Bell companies, whose revenues from local phone services aren't that vulnerable to the economic slowdown, SBC's stock price has held up well compared with the sharp downturn of others in the sector.

Still, Whitacre and other Bell executives say it's time for the government to stop treating them like monopolies and loosen oversight of their business so they can offer new services. That's why they are lobbying hard for a measure, sponsored by House Commerce Committee Chairman Rep. Billy Tauzin, R-La., that would roll back parts of the 1996 Telecommunications Act.

Associated Press: Some of the loudest opponents to the Tauzin bill are would-be DSL rivals who blame their financial distress on SBC and the other Bells. They say the Bells have failed to open local telephone networks to competition, charged too much for rivals to lease your direct connections to the nation's homes and hampered their ability to hook up customers in a timely fashion. How do you respond to that criticism?

Whitacre: I think they can use their decreased net worth to be effective in lobbying against us, but I think they're not looking at the big picture. None of us are going to have a business because the cable (TV) people, who are unregulated, are going to have it all. I think they've got the wrong opponent here. They're not going out of business because of this bill. The facts are we're selling DSL, they're selling DSL on our network, and the cable companies are killing both of us.

AP: Some state regulators and legislators are being urged to divide the Bell monopolies into two separate companies: a wholesale business that owns the local phone network and leases those lines to retail providers of phone service, one of which would be the other half of each Bell company. Rivals say this will level the playing field, forcing all service providers to pay an independent network operator.

Whitacre: It would (cost) big numbers. You would have to separate computer systems. That in itself is hundreds of million of dollars. And for what? By the time that fight's over, and should they prevail, which is ridiculous, the market has gone anyway to the wireless, the cable and the satellite companies. It's a silly argument.

That's put out there by AT&T as a tactic. That's all that is. Should I march in and demand that the cable companies separate their programming from their network? I will if they keep (trying to split us up). And I'll demand that they lease me ... their cable facilities so I can put my DSL on there.

AP: A few years ago, everybody was raving about bundled services as the must-have for the telecom industry. They said consumers wanted a variety of services, from local phone to Web access to cable TV, on one bill. But now that AT&T has decided to splinter itself into smaller companies, some observers question whether the bundling idea was a bust and whether consumers really want one-stop shopping.

Whitacre: I did notice when AT&T announced their plans to break apart, someone asked that question. Their chairman was quoted as saying, "We'll still be able to bundle and integrate all this stuff out of different companies into one place." I had private thoughts about that statement.

I still believe bundling is a good thing to have. But it's certainly not 100 percent of the consuming public. The bundles could be DSL with local service, with broadband access, with an ISP. There are a lot of combinations you can do there.

AP: As someone who has been in the telecom business for so long, what advice do you have for companies as they weather the current economic slowdown?

Whitacre: If you had a good business plan, I think you can ride it out. If your business plan was predicated on making a quick buck, you probably won't make it.

And the things you do is, of course, you cut way back on your capital spending or as much as you can. You don't hire more people. You make sure all the lights are turned off and you don't drive anymore than you have to. All the things that would come to mind. And you put your head down and you try to survive this.

archive