Let Competition RingLet Competition Ring

Reliable, high-quality service is more important than price, say business-technology managers. Some are even willing to pay a 10% or 15% premium for top-flight service. That's why they've been frustrated at the decline in service quality during the past several years. But there are signs of hope. "Six months ago, customer service was terrible and getting worse. It was atrocious across the board," Burke says. "But now, it's starting to get better."

Business-technology managers face many of the same issues they've always confronted when dealing with telecom carriers as they evaluate the new competitive landscape. Using one carrier for end-to-end managed service eliminates the blame game and finger-pointing when there are problems because a single carrier has control of all of the switches, routers, and circuits in the network. Many carriers claim they have that ability now, but it's actually rare. WorldCom, for instance, has local access in 100 metropolitan areas serving about 70% of U.S. businesses. But most businesses also have offices in suburban areas or in cities where WorldCom doesn't have local access, requiring the carrier to rely on a local or competing carrier.

Using multiple carriers can pose problems. AT&T generally guarantees that frame relay outages on its network will be repaired within four hours, says Oray Auzenne, director of network technology services for Farmers Insurance Group. But it can take twice as long when a local circuit is involved. "Those time frames are ridiculous," he says. "It begs for improvement."

Still, many businesses use several carriers to ensure network redundancy and reliability, and because the competition keeps rates low and service quality high. What's still unclear is whether the local carriers will be given serious consideration.

Local carriers are working on all aspects of customer service. They're more flexible with contract terms and conditions than the long-distance providers, consultant Rohde says. SBC has redesigned all of its data services so they're consistent in terms of port speeds and prices in every state. Verizon is improving its business-customer portal so it can be used to issue and track trouble requests and view bills. BellSouth is assigning a dedicated support team to customers pre- and post-sales efforts. "We try to take the headaches away from the CIO," Adams says.

That's what businesses are looking for, says Adventis' Aguirre, who discussed the issues with 300 large-company CEOs and CIOs in the past two years. "CIOs are telling carriers they need to accelerate managed services, integrate services much better, and deliver them in a utility fashion," he says. "And they expect a 15% to 20% reduction in cost compared to doing the same tasks internally."

Still, there are hurdles to overcome. Some IT executives have given up on the local carriers because of years of poor service and high prices. Watsco Inc., a $1.2 billion-a-year heating and air-conditioning distributor, uses AT&T, SBC, and Sprint for its 15 networks, says Bill Rowley, technology and communications director. But he has replaced SBC access lines with those from competitive local access providers when available. "I have relationships with the presidents of the companies, and I get good service," he says. "With BellSouth and SBC, there's not a prayer that they'd give me the time of day."

That's an attitude the local providers will have to overcome with high-quality products and good service. "We recognize that many customers have long-term contracts with long-distance carriers," BellSouth's Adams says. "But if we can pick up 10% to 25% of their business, our intent is to become their primary carrier."

Before they do that, local carriers will have to convince business-technology managers that they can do as good a job as their long-distance rivals. "If they can ensure that they've got the same or better stability, performance, and enhanced services," says Farmers Insurance's Auzenne, "then I think they'd have a very strong chance of breaking into the market in a big way."

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