NEW YORK-The wireless telecommunications business may account for a minority of Bell Atlantic Corp.’s revenues, but its entrepreneurial example has influenced profoundly the incumbent carrier’s entire strategy, according to Ivan G. Seidenberg, the company’s president, chairman and chief executive officer.
Seidenberg told attendees of Warburg Dillon Read’s 1998 Global Telecom Conference that Bell Atlantic aims to “increase growth, improve shareholder return and create a sustainable business model for the next 10 to 15 years,” operating according to three strategic beliefs. These are to “build an industry-leading domestic wireless business; meet business customers’ needs worldwide for data; (and) provide high-speed connectivity to the mass market.”
The chief executive also said Bell Atlantic’s “aggressive business plan moves are magnified by the pending GTE (Corp.) merger.”
“We plan to fulfill the national wireless footprint we want,” he added.
Neither the U.S. Department of Justice nor the Federal Communications Commission has approved the merger, according to a Nov. 16 report by Scott C. Cleland, a telecommunications analyst for Legg Mason Wood Walker Inc., Washington, D.C.
“The merger largely depends on Bell Atlantic gaining FCC approval to enter into long-distance in (Bell Atlantic’s) major states … Thus, the greatest risk to this merger is continued stalemate of the 271 long-distance entry process,” Cleland said.
Seidenberg said Bell Atlantic expected to achieve 271 approvals, and the company plans to issue a proxy statement seeking shareholder approval of the planned merger by early next year. He did not elaborate further, saying the company is in a quiet period about the pending merger.
Bell Atlantic expects to earn $28 billion in revenues this fiscal year, $3 billion from wireless telecommunications. Within wireless, the company expects to generate $2.2 billion in revenues from domestic operations and $800 million in revenues from ventures in six foreign countries, said Seidenberg.
Bell Atlantic Mobile has nearly 6 million subscribers, of which 500,000 are digital. Bell Atlantic Global Wireless Group’s overseas interests have 2 million customers, said Seidenberg.
“We have reorganized our telecommunications group around five different businesses (with the goal of) unifying our market, strengthening our brand and enhancing our scale and scope,” he said.
The five new Bell Atlantic units comprise these customer sectors: consumer, expected to realize fiscal 1998 revenues of $10 billion; network, or switched and special access, services, expected to generate $6 billion revenues; enterprise, or major corporations, $5 billion; general, or smaller and medium-size businesses, $5 billion; and directory services, $2 billion in revenues.
For business and consumer customers, bundling services is a key component of Bell Atlantic’s strategy, he said.
“We recognize that we must apply in our other five businesses the four things that drive excellence in our mobile business,” Seidenberg said.
The first wireless business driver is “technical deployment, an early and aggressive investment (of $600 million so far) to meet service capacity requirements,” he said.
By Dec. 31, Bell Atlantic Mobile will have “100-percent [Code Division Multiple Access] coverage,” said Seidenberg.
“About 50 percent of our digital subscribers are new to Bell Atlantic,” he added.
BAM’s digital subscribers are averaging more than 300 minutes of use per month, triple the MOU of its analog cellular customers. In addition, digital customers are generating double the average revenue per unit of analog users, reports the company.
Pricing is the second catalyst for wireless revenue growth, Seidenberg said. In September, BAM inaugurated its SingleRate plan, which Dennis F. Strigl, BAM’s president and chief executive officer, has described as “a family of flat-rate, all-inclusive price options for all categories of customers.”
Bell Atlantic’s SingleRate plan was a response to AT&T Wireless Services Inc.’s Digital OneRate plan implemented earlier this year.
“We feel good about our response to AT&T’s OneRate plan,” Seidenberg said. “It’s very early, but we are seeing churn rates decrease and our high-end customer base grow faster.”
Generating operating efficiencies while improving customer satisfaction is the third key driver of Bell Atlantic’s wireless strategy.
“Our acquisition cost per subscriber is one of the lowest in the industry,” Seidenberg said.
“J.D. Power (and Associates) ranked us No. 1 one in customer satisfaction in four of five markets we serve. To displace AT&T is a great source of satisfaction to us.”
In September, J.D. Power named BAM the leader in overall customer satisfaction, whose most important criterion was call quality, in the Boston, New York, Pittsburgh and Washington, D.C./Baltimore markets.
Finally, Seidenberg said Bell Atlantic Mobile continues to innovate its distribution channels. It now has about 175 stores and has opened an electronic commerce operation on its Web site.
