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Gulf Coast Entrepreneur Helps Businesses All Over State

Metro Business Chronicle July 2007

Robert Hardy and RMH Telecom Consultants improve the bottom line

by SUSAN MARQUEZ

Special to the MBC

 

PASCAGOULA — When Robert Hardy went to work for Southern Bell in 1965, he had no idea that he’d spend a lifetime preparing for the business established in 2004. The Mississippi State graduate says, “I went to work for Southern Bell right out of college. But as fate would have it, I was drafted into the Navy and served as an officer for four years doing underwater intelligence. I dealt with Soviet submarines,” he says nonchalantly.

Robert M. Hardy
Robert M. Hardy

 

Hardy is the founder of RMH Telecom Consultants, a telephone expense reduction service. “We’ve learned that most of our clients simply can’t read or understand their telephone bills,” he says. “The accountant gets the bill and checks if it’s pretty much what was paid the month before. We refer to that as ‘weigh it and pay it.’ But there is a better way.” Explaining that he and his consultants can analyze a company’s telephone system, Hardy says that in most cases (90%), telephone bills can be reduced 20 to 50%. Analysis of telecom invoices and infrastructure covers all aspects of a business’s telecommunications, including local telephone service, long distance, data networks, wireless, and internet ISP/ASP. For the client, there is no expense, no company resources are used, and where is no risk. Findings and recommendations are presented in easy-to read executive summaries, and no action is taken without the client’s authorization. “The client is not obligated to use our services,” says Hardy. All implementations are handled for the client at no charge. Expense reduction services are provided on a contingency basis. RMH’s fees are self-funded out of the savings generated from reduced telecom expenses. “We split the savings 50-50 with the client for 24 months. Nothing comes out of their pocket, yet they are still pocketing savings each month. It’s found money, with no overhead and no risk.”

 

Hardy’s career path naturally led him to the Telecom consultant arena. “After leaving the Navy, I went back to work for BellSouth/AT&T, where I stayed for 21 years,” says Hardy. “I t took an early retirement and moved to Indianapolis, where I started a computer service bureau that specialized in computerized telephone bills. I ran that for five years, and patented the first computerized phone bill. We could put a 3,000 page phone bill on a telephone disk.” The idea was a success, and Hardy sold the license to Sprint and cashed out. After moving back to his hometown of Pascagoula, Hardy hung out a shingle as an executive consultant. “I served as interim president and COO of companies, directing high-tech turnarounds and startups,” he says. Over time, his expertise developed into telephone expense reduction.

 

Since its beginning in 2003, RMH Telecom Consultants has started operations in 87 cities in the United States, Canada and Puerto Rico. Businesses, nonprofit organizations and city governments have all enjoyed significant savings due to the efforts of RMH. “We have $63,480,000 of our clients’ telephone expenses under contract,” says Hardy. Among the client list for RMH is the Trial Lawyers Association of Mississippi, Tennessee, South Carolina and Ohio with 7,400 member law firms; Hancock Bank, Jackson County (Mississippi); First National Bankers Bank of Baton Rouge with 350 member banks; Jackson Academy; Singing River Hospitals in Pascagoula and Ocean Springs, several Jackson law firms and many more. “For Jackson County alone, we’ve reduced their telephone bill by $290,000 over a three year period,” says Hardy. Over seventy percent of his clients never change vendors.

 

“The telephone industry is still in a complete state of turmoil,” says Hardy. “Mergers and acquisitions mean that there are constant price wars for every component of telecommunications. In the United States alone there are over 2000 telecom vendors, and over 100 long distance providers. There is constant turnover among providers. Most people don’t have the time or knowledge to know what’s what any more. That’s where we come in. We’ll take that monkey off your back.” Hardy’s plan to grow his business involves sharing it with others. “There are two plans we offer. We give people the opportunity to affiliate with us, and they get a percentage of the profit. We offer an independent contract for sales and business development on a commercial basis.” The other opportunity is a turnkey “business in a box” approach. “It’s basically cloning the business so that folks can establish their own profit center.” Hardy explains that it’s not a franchise, because there is no territory and no royalties are paid.

 

“Our program offers an individual the opportunity to develop his or her own business consulting practice focusing on telecom expense reduction and business optimization,” he says. The company offers training for both options in the Pascagoula area. “Training takes from three and a half days to six and a half days, depending on which option you choose,” Hardy says. Between 2002 and 2003, 197 consultants were licensed in North America. “Since August 2004, we’ve trained 87 licensed contractors and 59 individual profit centers.” No expense, no resources and no risk are what RMH promises to its clients. “It’s truly a win-win situation,” Hardy notes. There is a tremendous amount of waste in corporate America, much of it very unnoticed, and RMH Telecom Consultants has found a way to cut the fat.

 

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JACKSON COUNTY LEADERS TOLD HOW TO CUT PHONE BILLS $80K – Nov. 23, 2010

— Read article from The Sun Herald

 

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ATLANTA and HUNTSVILLE, Ala., Oct. 1, 2010 /PRNewswire-FirstCall

— EarthLink, Inc. (Nasdaq: ELNK), one of the nation’s leading Internet service providers, and ITC’ DeltaCom, Inc. (OTC Bulletin Board: ITCD), a leading provider of integrated communications services to customers in the southeastern United States, today announced a definitive merger agreement under which EarthLink will acquire ITC’ DeltaCom (Deltacom) read more

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Alcatel-Lucent job cuts deepen after loss

NEW YORK (MarketWatch) — Alcatel-Lucent said Friday that it will eliminate an additional 3,500 positions, on top of 9,000 job cuts already announced, after the telecommunications-equipment maker posted a fourth-quarter loss and forecast a drop in first-quarter sales.

The French-American company, which completed a trans-Atlantic merger in December, blamed stiff competition in the wireless market and a shortfall in North America, where large phone companies have scaled back equipment purchases.

Like other equipment providers, Alcatel and Lucent have struggled to drive growth since the end of a global technology boom seven years ago. The two companies had hoped that their pooling of resources would allow Alcatel-Lucent to rise above the competition and solidify its position as the No. 1 network vendor in the world.

Some big phone companies, however, are putting off purchases until they find out which duplicate product lines Alcatel and Lucent intend to phase out. Rivals, for their part, are trying to take advantage of the uncertainty surrounding the merger to steal market share.

“Competitors always seek to find openings where they perceive there may be some disruption, and we are dealing with that,” Chief Executive Patricia Russo said on a conference call with analysts.

Alcatel-Lucent had originally said that it would cut 9,000 jobs over three years. The newly proposed 12,500 reduction in jobs would represent about 16% of the company’s global workforce, though Alcatel-Lucent hasn’t specified where cuts will take place.

The job reductions are expected to generate pretax savings of 1.7 billion euros ($2.2 billion) over three years, up from an original target of 1.4 billion euros, Alcatel-Lucent said. At least 600 million euros of those savings will take place in 2007.

“These are difficult but necessary decisions, and we will manage these reductions with care,” Russo said. “We are committed to serving our customers’ needs with a competitive cost structure and effective operating model.”

Ronald L Kellogg

RK Associates, LLC

Office: 918.254.6677

Fax: 918.254.6681

Cellular: 918.808.0227

 

“…The selection of and proper implementation of Communications Technologies can have a huge impact on the ability of a corporation to meet and exceed its stated goals.”

 

 

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AOL lays off 450 workers in Dulles headquarters

December 14, 2006

 

About 450 workers at the Dulles headquarters of AOL were laid off as the company continues restructuring away from its traditional roots as a subscription-based provider of dial-up Internet access, an Associated Press report said.

 

The Associated Press report said AOL announced in August that it planned to cut about 5,000 jobs, or roughly a fourth of its global workforce, as it embarked on major changes designed to shift the company’s revenue stream from subscription fees to online advertising.

 

Many of AOL’s key features, like email accounts, are now available for free.

 

The report quoted AOL spokesman Andrew Weinstein as saying that the layoffs essentially represent the final round of job cuts.

 

Worldwide layoffs roughly matched the 5,000 figure cited back in August, but fewer of the cuts came at the Dulles headquarters than had been anticipated, the report said.

 

Since the company announced its broad plans in August, it has closed all four of its domestic call centers in Ogden, Utah; Albuquerque, N.M .; Tucson, Ariz.: and Oklahoma City. All of its call centers are now located overseas, in Bangalore, India, and the Philippines, Weinstein said.

 

In August, AOL’s parent company, Time Warner, said it expected to spend $250 million to $350 million through 2007 to implement changes at AOL. About half of that was earmarked for employee severance, the report further said.

 

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AT&T’s acquisition of BellSouth

(Atlanta Journal-Constitution, The (KRT) Via Thomson Dialog NewsEdge)

Oct. 10–After months of work, AT&T is close to completing its acquisition of BellSouth.

 

But, while the deal could be inked this week, the integration of BellSouth promises to be a long, complex task. Many changes — even those as mundane as putting new logos on BellSouth trucks — could take weeks or months. And when it comes to evaluating how much Atlanta will change because of the buyout of a corporate icon, a verdict is far in the offing.

 

For now, several major issues still need to be decided, including approval of the deal by the Department of Justice and the Federal Communications Commission. The FCC is scheduled to vote Thursday, although that meeting is subject to change.

 

When the necessary sign-offs are finished, much more work begins. The first quarter of 2007, in particular, promises to be a critical time for BellSouth and sibling company Cingular Wireless, as that is when a host of changes are likely to ripple through the companies.

 

Here are some key issues to watch:

 

–JOB CUTS — With BellSouth and Cingular in the fold, the new AT&T will have about 317,000 workers. AT&T has said it will shed about 10,000 jobs because of the deal, many through attrition.

 

The merger is expected to have little impact on BellSouth’s blue-collar workers, such as the technicians who handle service calls.

 

Corporate jobs, however, could be in line for many changes. But it’s likely that many of those will not happen until early 2007, with no massive layoffs this year.

 

AT&T and BellSouth have already spelled out details of severance packages. Many BellSouth employees will be in line for hefty payouts.

 

It’s a bit different at Cingular, where severance packages will not be quite so attractive. Payoffs for displaced Cingular workers are expected to be lower than for many of their counterparts at BellSouth.

 

–REAL ESTATE — BellSouth uses office space all over metro Atlanta, from the company’s signature tower in Midtown to a campus at MARTA’s Lindbergh station. Cingular, meanwhile, is headquartered in a big building beside Ga. 400.

 

With BellSouth’s 5.2 million square feet of space in metro Atlanta and Cingular’s 1.2 million square feet, it’s clear the companies will have a surplus. BellSouth is likely to keep its big Midtown office tower, which it owns. But other buildings will be vacated, perhaps including BellSouth’s current headquarters at 14th and Peachtree streets, in a building called the Campanile. BellSouth also owns that structure.

 

–PHILANTHROPY — Some in Atlanta are concerned that BellSouth’s deep connections to the city will fray under outside ownership. The city has long benefited from BellSouth’s considerable wealth, and company executives are familiar figures in local circles.

 

While executive changes are definitely afoot, AT&T has said it will maintain levels of giving.

 

“I think everyone is really reassured by every statement that AT&T has made,” said Ann Curry, president of an Atlanta fund-raising firm Coxe Curry & Associates. “Already, AT&T increased its gift to the Woodruff Arts Center, which was really a good signal.”

 

–RETIREES — BellSouth has more retirees than active employees — 69,000 vs. 61,000.

 

BellSouth has repeatedly assured retirees that their pensions and other benefits are fine, but many remain concerned about possible future changes. AT&T, in a bid to reassure former employees, is expected to send letters to all retirees shortly after the deal closes.

 

–SERVICES AND PRICING — Consumer groups have warned that the combined company’s prices will increase, while AT&T and BellSouth have noted that they face too much pressure from cable companies to make many changes.

 

What about other service issues? People who use BellSouth e-mail addresses will see a change to the AT&T name in time, but no date has been set.

 

And new services could be in the offing. AT&T already offers advanced video services in some areas, under the name U-verse. These services, which use a technology known as Internet Protocol TV, or IPTV, could be rolled out to BellSouth areas where the network has enough bandwidth. This might happen by the middle of next year.

 

For business customers, the new AT&T could offer phones that function as cellphones while outside and as landlines while inside, in what is known as wireless and wireline convergence.

 

–LOCAL LEADERSHIP — Historically, there have been a number of high-level leadership changes when AT&T — formerly SBC Communications — acquires a company. In some cases, people lose jobs. In others, people leave because of attractive severance offers or the lure of better positions elsewhere.

 

Much of the same is expected at BellSouth, including the pending retirement of current Chairman and CEO Duane Ackerman. The future of other executives remains unclear, even though AT&T has said all officer-level execs will be offered other positions with the company.

 

Company watchers are especially interested in what happens to a few top leaders. These include Mark Feidler, BellSouth’s president and chief operating officer. He had been the heir apparent to Ackerman at BellSouth.

 

Another person to watch: Ralph de la Vega, the No. 2 leader at Cingular. He has long been seen as the man to replace CEO Stan Sigman when he retires.

 

AT&T also will need to announce a number of big appointments, including who will run BellSouth’s nine-state region, which may become known as AT&T South. AT&T also will choose three BellSouth directors to add to the AT&T board.

 

–YELLOW PAGES — BellSouth’s big, highly profitable Yellow Pages operation — formally known as BellSouth Advertising and Publishing Group, or BAPCO — is based in a complex in metro Atlanta. While AT&T hasn’t officially announced what will happen, it is expected that many BAPCO functions will be consolidated at AT&T’s existing operation in St. Louis. “Ike” Harris, who runs BAPCO for BellSouth, could become the leader of the new, combined entity.

 

Regardless of who runs it, the combination of AT&T and BellSouth Yellow Pages will forge an industry giant.

 

“It’s taking two powerhouse companies and making one uber-powerhouse,” said analyst Charles Laughlin, program director with the Kelsey Group.

 

–BRANDING — The BellSouth and Cingular names will be dropped under AT&T ownership but not immediately. By around the first of the year, BellSouth bills should be converted to AT&T, for example. The company also will get to work placing new logos on trucks and fresh AT&T signs on BellSouth buildings.

 

More immediately, those who live in the South will hear plenty about AT&T’s purchase. Ads are planned for right after the deal closes and will appear in print, on TV and on radio.

 

As for Cingular, re-branding isn’t likely until sometime early next year. The new AT&T doesn’t want to tinker with the brand just as the holiday season begins.

 

Cingular also faces the big task of revamping the branding of its massive retail network, which includes 2,000 company stores and kiosks and an additional 6,800 places with authorized agents.

 

–STOCK — Ultimately, the measure of AT&T’s success will be in the performance of its stock.

 

Because the BellSouth buyout is an all-stock deal, AT&T will become a very widely held stock in Georgia, Already, there are about 50,000 BellSouth shareholders in the state.

 

In the months since the deal was announced, share prices for both companies have climbed. BellSouth hit a five-year high in September, reversing many of the losses from earlier in the decade.

 

Analysts expect AT&T shares to be trading at about $33 a year from now.

 

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IRS & Telecom Expense Federal Excise Tax

 

The United States Treasury Department has announced that it will no longer collect a 3% federal excise tax on long distance and wireless calls and will refund/credit approximately $15 billion to taxpayers. This is a onetime opportunity.

 

Phone companies and cellular carriers must stop billing for the tax on Aug. 1, 2006. Individuals and businesses can file for a refund/credit on their 2006 tax returns for excise taxes paid on long distance and wireless calls since March 1, 2003. Individuals who do not have phone bill records can seek a standard refund (“Safe Harbor”) that has yet to be determined.

 

Callers will still pay a 3% excise tax on local phone calls. But that tax will no longer be levied on services that don’t distinguish local calls, such as cellular, all-distance landline plans and Internet based offerings. Customers with those services can seek a refund/credit of their full excise tax payments.

 

Entities other than individual taxpayers may request only the actual amount of tax paid during the relevant period, and will not be allowed to claim the Safe Harbor amount. This means a company will be required to provide documented proof of the exact amount of excise tax being claimed for refund/credit.

 

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FCC adds USF to VoIP

 

On June 21, 2006, the FCC voted unanimously to require all interconnected Voice over Internet Protocol (VoIP) services that connect to the public-switched telephone network to contribute to the Federal Universal Service Fund (USF). This $7.3 billion fund, which has been a feature of U.S. policy for more than 70 years, subsidizes telephone service in rural and low-income areas. The fund also runs a program called E-Rate that provides discounted Internet and phone service to schools and libraries.

 

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Verizon to Drop ‘Supplier Surcharge

The Associated Press

By JOHN DUNBAR

August 30, 2006

 

“Consumers should receive the benefits of the commission’s action last summer to remove regulations imposed on DSL service. “

 

Verizon Communications Inc. said Wednesday that it was dropping a ‘supplier surcharge’ on its high-speed Internet service for retail customers.

 

The decision comes less than a week after the Federal Communications Commission mailed a letter to the company asking that it explain the reasoning for the charge.

 

The FCC also had sent a letter to BellSouth Corp., which said Friday that it will stop charging a $2.97 per month fee on a similar service.

 

‘We have listened to our customers and are eliminating this charge in response to their concerns,’ Bob Ingalls, chief marketing officer for Verizon, said in a statement.

 

The dispute followed a decision by the government to stop assessing a Universal Service Fund charge on companies that offer digital subscriber line (DSL) Internet service.

 

The companies had passed the charge, which subsidizes services in rural and low-income areas, on to their customers.

 

Consumer groups have accused the companies of simply replacing the dropped fee with a new charge rather than passing along savings to their customers.

 

Verizon dropped the fee on Aug. 14, but informed customers that it would be charging the new ‘supplier surcharge’ on Aug. 26. The company told customers in an e-mail that the monthly fee would be $1.20 or $2.70, depending on their connection speed. The fee affected about half of Verizon’s 5.7 million DSL subscribers, according to the company.

 

Customers who have already paid the charge will receive credit, the company said.

 

Prior to Aug. 14, Verizon was collecting $1.25 or $2.83 from DSL customers, depending on the connection speed.

 

Verizon said Wednesday the fee was ‘imposed by its affiliated operating telephone companies to cover costs associated with providing DSL service to customers who do not also subscribe to Verizon’s traditional phone service.’

 

On Friday, BellSouth said it was immediately eliminating the fee and that it was ‘designed to recover a number of costs remaining from previous regulatory obligations and other network expenses.’

 

FCC Chairman Kevin Martin released a statement supporting the companies’ action.

 

‘I am pleased that both Verizon and BellSouth have eliminated fees recently imposed on their DSL customers,’ he said. ‘Consumers should receive the benefits of the commission’s action last summer to remove regulations imposed on DSL service.’

 

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BellSouth drops Internet fee after FCC threat

Reuters

August 25, 2006

 

By Jeremy Pelofsky

 

WASHINGTON (Reuters) – BellSouth Corp., the No. 3 U.S. local telephone company, on Friday said it would immediately drop a $2.97 monthly fee for high-speed Internet service after U.S. communications regulators threatened to investigate the charge.

 

The U.S. Federal Communications Commission had been poised to send a letter of inquiry to BellSouth asking the carrier to explain the new fee, which replaces a surcharge for a government subsidy program, FCC officials said.

Most customers would see the change on their bills within a week, but it could take up to six weeks, BellSouth said. It added that customers charged the fee dating back to August 16 would receive a credit.

 

However, the FCC’s enforcement bureau on Friday did send a letter to Verizon Communications, the No. 2 U.S. telephone company, for information on its own new charge instituted to replace the fee for the government program.

 

“The bureau is investigating whether Verizon’s practices are consistent with the obligations set forth in the commission’s Truth-in-Billing rules,” said the letter, which requires a response within 20 days. The FCC could seek enforcement action, including fines, against the company if any regulations have been violated.

 

As of August 14, providers of high-speed Internet service, known as broadband, are no longer required to contribute part of that revenue to the Universal Service Fund (USF), which subsidizes communications services to schools, lower-income households, and rural areas. The carriers had passed that USF cost onto their customers, but an FCC decision last year phased out the USF fee for the telephone companies’ high-speed Internet service.Still, BellSouth continued charging its nearly 3.3 million high-speed Internet customers $2.97, and Verizon said it would impose a new monthly surcharge of $1.20 or $2.70, beginning August 26, which it said was to help subsidize connection costs.

 

Verizon had charged broadband customers a monthly fee of $1.25 or $2.

 

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Time Warner Telecom to Buy Xspedius for $531.5 Million

Posted on: 07/28/2006

 

Consolidation fever struck again late Thursday as Time Warner Telecom Inc. announced it has snapped up Xspedius Communications LLC, a privately held CLEC based in Missouri, for $531.5 million.

 

The deal is expected to close within the next six months. Time Warner Telecom will pay $212.5 million in cash and $319 million in shares of its Class A Common Stock. Time Warner Telecom will not assume any debt in the acquisition.

 

During a conference call on Friday morning with journalists, Time Warner Telecom’s president, chairman and CEO, Larissa Herda, said her company is after Xspedius’ metro fiber. “They are not really leveraging their fiber assets,” she said, noting that pursuing customers in the large enterprise market is expensive. She said Time Warner Telecom will work with its new company to target larger customers and offer more sophisticated bundles.

 

“Tier 2 markets really sing for us,” she said.

 

Xspedius’ fiber network provides metro Ethernet, local and long-distance voice, data, and dedicated Internet access services, in 43 markets across 18 states and the District of Columbia. Herda said Xspedius’ metro fiber reach gives Time Warner Telecom the chance to overlay its products onto those networks, thereby upgrading Xspedius’ bundled services so revenue per customer increases.

 

Executives would not go in-depth about layoffs or sales strategies except to say Xspedius salespeople are eager to start selling Time Warner products.

 

“The enhancements this merger brings will provide our customers new and expanded service opportunities,” said Paul Pierron, president and CEO of Xspedius, in a statement. “The combination of these two companies solidifies Time Warner Telecom’s position as a leading national provider of network services to enterprise customers.”

 

Meanwhile, Xspedius’ largest shareholder, Thermo Capital Partners, has committed to continuing as a long-term shareholder in Time Warner Telecom and offered a cash election to other Xspedius shareholders, Time Warner executives said. Thermo Capital will not have a seat on the Time Warner Telecom board.

 

The transaction has been approved by the required majority consent of equity holders of Xspedius Communications and does not require a Time Warner Telecom shareholder vote.

 

Evercore Partners acted as financial advisor to Time Warner Telecom, and Wachtell, Lipton, Rosen & Katz, and Faegre & Benson acted as legal advisors. Brown Brothers Harriman acted as financial advisor to Xspedius Communications and Taft, Stettinius & Hollister acted as legal advisor.

 

Time Warner Telecom stocks were up 74 cents during mid-afternoon trading on Friday, at $16.67.

 

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July 24, 2006

 

BellSouth shareholders approved the proposed sale of their company to AT&T for $67 billion in stock, according to an Associated Press report. The report said AT&T shareholders later voted to issue new stock in the combined company.

 

The deal would expand the reach of the nation’s largest telecom provider and put the two companies’ wireless joint venture, Cingular, under one roof, the report said. The BellSouth vote during a special meeting in Atlanta was 97% in favor of the deal, which was announced March 5 and was expected to close by the end of the year. Federal and state regulators also must approve the deal.

 

Once the deal is completed, the BellSouth and Cingular names would be phased out, the report said.

 

 

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AT&T union pickets over staffing cuts

Firm calls reductions an unpleasant reality in tough telecom era

12:00 AM CDT on Saturday, June 24, 2006

The Dallas Morning News

 

AT&T Inc.’s largest union is pushing back against the company’s continuing job cuts by picketing in front of its downtown Dallas office tower.

 

About 50 Communications Workers of America members walked a lunch-hour picket line Friday as part of a weeklong mobilization in Texas and four other states.

 

Nancy Hall of CWA Local 6215 said it was the first local picket line in two years.

 

“We’re showing our unity and showing management that we’ve had enough,” she said.

 

An AT&T executive said in March that the company expects to reduce by 26,000 jobs between 2006 and 2008. Half would result from the merger of SBC Communications Inc. and the former AT&T Corp., and half would come from other productivity efforts.

 

In addition, AT&T anticipates shedding 10,000 jobs between 2007 and 2009 if its merger with BellSouth Corp. goes through.

 

AT&T spokesman Jerry Lawrence said the cuts are an unpleasant reality in an era of unprecedented competition in the telecom industry. “These reductions are ongoing and will continue into the future as we try to match our workforce to our workload,” he said.

 

Mr. Lawrence wouldn’t address specific reductions, but Mike Littleton, CWA’s director for Texas and Oklahoma, said AT&T plans to cut about 300 jobs the Dallas-Fort Worth area.

 

Mr. Littleton acknowledged that there was little the union could do about the reductions. “We try to challenge the company to look at alternatives,” he said.

 

Shares of AT&T closed up 8 cents Friday at $27.37.

 

 

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AT&T begins job cuts in Texas facility

June 13, 2006

 

AT&T has begun its latest round of job cuts among union workers in Dallas as well as elsewhere in the state, a report from the Dallas Morning News said.

 

The report said an AT&T spokesman declined to say how many positions would be affected but said that, under the terms of the union contract, all the affected workers were guaranteed a job offer somewhere else in the company.

 

All of the affected workers were represented by the Communications Workers of America union, which included more than 100,000 workers nationwide at AT&T, the report said.

 

The union did not return calls for comment.

 

The cuts are nothing new for AT&T, which has cut jobs every quarter since 2000.

 

 

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May 16, 2006

 

Attorney General Charlie Crist today announced that his office has launched an investigation into five telephone companies for placing unauthorized charges on consumers’ bills.

 

Charges for an Internet shopping service have appeared on phone bills sent to BellSouth, Sprint, Verizon, AT&T and SBC Communications customers, triggering the investigation into what might be a case of ‘cramming,’ according to a press statement from Crist’s office.

 

Cramming is a practice that bills for extra services without the customer’s knowledge.

 

Crist’s Economic Crimes Division began the investigation last week after the Tallahassee Democrat detailed the charges that several Sprint customers found on their bills. The $12.95 charges are for a service called Email Discount Network, which supposedly offers members a discount for Internet shopping done through the company’s Web site. Further investigation revealed that BellSouth, AT&T, SBC Communications, and Verizon customers also found the unauthorized charges on their bills.

 

According to Florida Statutes, phone companies are responsible for third-party billers who place charges on the phone bills.

 

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AOL laying off about 1,300 employees, about 7 percent of work force

By: ANICK JESDANUN

AP Internet Writer

 

NEW YORK — AOL is laying off about 1,300 employees, or 7 percent of its worldwide work force, and is closing its call center in Jacksonville, Fla.

 

Other cuts will come from call centers in Ogden, Utah, and Tucson, Ariz.

 

The layoffs announced Tuesday represent the first major cuts since the Time Warner Inc. Internet unit cut about 700 positions last fall.

 

Although AOL’s subscription has been declining, spokesperson Nicholas Graham attributed the layoffs to more savvy customers and better tools for them to help themselves.

 

“The Internet world of 2006 is very different from the world of 1996 when AOL first established these member centers,” Graham said. “Today, AOL members are more savvy and sophisticated online. They are very different members today than they were in 1996.”

 

In its early days, AOL had a reputation for attracting beginners online, leading some longtime users to deride the service as the “Internet on training wheels.”

 

But AOL dropped some of its handholding over the years and began offering its subscribers computer-diagnosis, anti-spyware and other free software, “allowing them to troubleshoot on their own,” Graham said.

 

In addition, he said, AOL has been expanding its online help areas, such that 8 million customers a month now look up information themselves online, compared with 5.5 million who interact with a human by phone, e-mail or online chat.

 

“They are able to accomplish with a couple of clicks what it used to take them a phone call or two or three to accomplish,” Graham said.

 

As a result, Graham said, call volume has dropped by about 50 percent since 2004.

 

“That’s a remarkable success in terms of customer care,” he said. “It requires us to balance our work force.”

 

By contrast, U.S. subscribers dropped by about 22 percent in the past two years. AOL had 18.6 million subscribers as of March 31, down from a peak of 26.7 million in September 2002, as more Internet users drop dial-up connections in favor of broadband.

 

AOL is closing its Jacksonville center, laying off 780 employees there. It is laying off 300 in Tucson and 125 in Ogden, with nominal reductions in other locations such as Albuquerque, N.M., and Dulles, Va.

 

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Verizon to close call centers in Iowa, 3 other states

Published: 04/28/2006 2:38 PM

By: Associated Press

 

DES MOINES, IA – Verizon Communications Inc. announced Friday it will close four call centers in Iowa and three other states, eliminating over 1,600 jobs, as it focuses on broadband, wireless and contracts with large business and the federal government.

 

The call centers to be closed by June 30 are in Sergeant Bluff, near Sioux City; Springfield, Mo., Greenville, S.C.; and Austin, Texas, said Bill Kula, a spokesman for Verizon, which acquired MCI Inc. for $8.5 billion in January.

 

The call centers were part of MCI, which has become part of a unit within Verizon known as Verizon Business. It provides support to residential customers with MCI services.

 

“We’re adjusting to the dynamics of the telecommunications industry as it exists today and focusing our attention and employment support in the areas of growth and de-emphasizing the areas of depletion of the customer base,” he said.

 

Kula said the employees being affected are outbound telemarketers, who are cold calling to sign up new customers, and inbound customer service representatives, who deal with existing customers about new services or problems. Also affected is management support teams.

 

In Iowa, 569 jobs will be eliminated. Another 399 jobs will be cut in Missouri, 406 in Texas, and 180 in South Carolina.

 

In addition, 107 positions in several other states and cities that provide support services for the call centers will be eliminated, Kula said.

 

The total number of jobs being cut is 1,661.

 

Kula said the job cuts are part of a previous plan Verizon announced in February 2005 to cut its work force by 7,000. Verizon’s total employment is 250,000.

 

Kula said the company is focusing on three key growth areas — broadband, wireless and large business and federal government contracts — and de-emphasizing the residential support for customers acquired through the acquisition of MCI.

 

“We continue to lose local telephone customers at a rate of around five percent a year,” he said.

 

He says more people are “cutting the cord” and discontinuing the use of local phone service and are going solely wireless or are turning to an Internet-based telephone system.

 

“We’re seeing a slow and steady deterioration of the local phone business in terms of raw subscribers,” Kula said.

 

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Birch Telecom Emerges From Bankruptcy

8:27 PM EDT, April 17, 2006

By Associated Press

 

KANSAS CITY, Mo. — Birch Telecom Inc. said Monday it has emerged from Chapter 11 bankruptcy protection, owned by creditors.

 

Under the Kansas City-based company’s bankruptcy plan, Birch will cut its work force from 442 to 300 by the end of the year and to 210 by the end of 2007. However, those numbers could change if the company grows.

 

Birch’s secured debt was reduced from $108.6 million to $35 million.

 

Creditors now own the reorganized company, which formally emerged from bankruptcy on Thursday.

 

Birch serves about 130,000 customers in more than 50 metropolitan markets.

 

“We are emerging as a much stronger company, with a greatly deleveraged balance sheet and the cash resources and operational structure necessary to compete effectively in the current marketplace,” President and CEO Stephen Dube said in a statement.

 

Birch filed for Chapter 11 bankruptcy protection in August 2005, after the Federal Communications Commission eliminated rules that forced regional Bell companies to lease space on their lines for government-set prices.

 

The Bell companies were allowed to negotiate higher terms, so costs for access increased and Birch amassed $150 million in debt.

 

It isn’t the first time the telecommunications company has survived bankruptcy. In July 2002, Birch reorganized its finances after what it called a downturn in the industry. The company emerged two months later with a plan to erase $233 million in debt.

 

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Comcast agrees to $1 million settlement with Mass. regulators

Associated Press

 

BOSTON – Comcast Cable Communications Holdings Inc. has agreed to pay $1 million in a settlement with Massachusetts that also requires the company to change its advertising and customer service practices.

 

The agreement is the culmination of a two-year investigation, spurred by hundreds of customer complaints filed with the state attorney general’s office and the Better Business Bureau.

 

Many of the complaints were from AT&T Broadband, which was acquired by Comcast Corp. three years ago, and the company has worked to improve customer service, Comcast spokes woman Shawn Feddeman said.

 

Attorney General Tom Reilly alleged that Philadelphia-based Comcast Cable, a division of Comcast Corp., advertised limited time offers of free or reduced rate digital cable packages without adequately disclosing the actual price of those services after the promotional period; hiding terms and conditions in difficult to read fine print; advertising free installation, but then charging consumers for installation; and charging a $5 monthly rental fee for a converter box and remote control, even for consumers who did not need them.

 

Consumers also complained of long waits to speak to customer service representatives, and the need to make repeated calls to address problems.

 

Comcast, the nation’s largest cable television operator, denied that any of its practices were unlawful.

 

“We do not agree with the Attorney General’s claims, however, we have already begun to make several changes” in customer service and advertising, Feddeman said.

 

Under the terms of the settlement, Comcast will pay $500,000 to support consumer aid programs, $250,000 to reimburse the costs of investigation, and $250,000 for in-kind services to Boys and Girls Clubs.

 

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AT&T plans to cut up to 10,000 jobs if it wins approval of its purchase of BellSouth

 

NEW YORK — AT&T Inc. plans to cut up to 10,000 jobs, mostly through normal turnover, if its $67 billion purchase of BellSouth Corp. is approved by shareholders and regulators, AT&T’s chief financial officer said Monday.

 

The work force reduction would take place over three years, AT&T’s Rick Lindner said. Before the cuts, the combined company would have around 317,000 employees, including Cingular Wireless LLC, which is now an AT&T-BellSouth joint venture.

 

The new company would be the country’s largest phone company — with nearly half of all lines. It also would be the largest cell-phone carrier and the largest provider of broadband Internet service.

 

Still, investors and analysts expect it to pass regulatory muster due to the fact that phone companies are facing increasing competition, especially from cable operators.

 

The acquisition, which was announced Sunday, is expected to close next year.

 

The 10,000 planned job cuts are in addition to the 26,000 cuts AT&T has already announced — 13,000 due to SBC’s acquisition of AT&T Corp., which closed in November, and 13,000 due to shifting priorities in the business. The combined SBC-AT&T took the name AT&T Inc.

 

At the Communications Workers of America, which would have about 200,000 workers at the combined company, spokeswoman Candice Johnson said the merger would be a “good opportunity for job growth” as the company expands into new technologies.

 

“We’re not looking for job losses at all,” Johnson said. The union has not yet endorsed the merger.

 

San Antonio-based AT&T expects the acquisition to save it $2 billion annually at first, increasing to $3 billion a year by 2010.

 

Slightly more than one third of the savings would come from reduced labor costs and consolidation of support functions and corporate staff, Lindner said.

 

The combined company would be based in San Antonio, depriving Atlanta of one of its largest corporate headquarters.

 

Georgia Gov. Sonny Perdue and Atlanta Mayor Shirley Franklin said Monday they both will fly to Texas soon to try to persuade AT&T’s executives to move their headquarters to Atlanta.

 

“It’s hard to replace BellSouth,” Franklin said. “They’ve contributed so much over the last decade. We’re anxious for their national headquarters to move here.”

 

Cingular’s headquarters would remain in Atlanta.

 

More savings from the proposed acquisition would come from reduced advertising expenses and combining the companies’ backbone network and information-technology operations.

 

“Over the last couple of years as we have operated Cingular and our Yellow Pages venture, it became clear that there was a lot of duplication that could be eliminated,” said Duane Ackerman, chief executive of BellSouth.

 

“This merger will allow us to move to a single brand for wireline, for wireless, for business and consumer, and that’s AT&T,” said Randall Stephenson, AT&T’s chief operating officer. “A single brand is much more cost efficient and far more effective.”

 

Under the terms of the deal, AT&T is paying 1.325 of its own shares for each BellSouth share. AT&T shares closed Monday down 97 cents, or 3.5 percent, at $27.02 on the New York Stock Exchange.

 

That put the value of the offer at $35.80 per BellSouth share. Those shares rose $3.04, or 9.7 percent, to close Monday at $34.50.

 

The narrow difference between AT&T’s offer and the market price for BellSouth shares indicated that investors believe the merger is almost certain to get through regulators.

 

AT&T plans to buy back stock worth at least $10 billion in the next two years, effectively paying for the premium given to BellSouth shareholders in cash, executives said.

 

David Kaut, a telecom regulatory analyst at the financial services firm Stifel Nicolaus & Co., said the merger would likely gain approval with modest conditions, such as the sell-off of business lines in overlapping territories.

 

One wild card, he said, may be Federal Communications Commission nominee Robert McDowell, a Republican who would take the open seat at the commission if approved by the Senate. McDowell is a lobbyist on behalf of the local phone carriers that compete with the Bells and could be more open to their concerns.

 

“We don’t think he’s going to go completely off the reservation and try to block” the merger, said Kaut. “He would probably try to work out some conditions that allow the deal to happen but also address competitive concerns.”

 

Regulators are likely to buy the telephone companies’ argument that other technologies will provide sufficient competition, Merrill Lynch analyst David Janazzo wrote in a research report.

 

Telephone companies are losing a few percent of their phone customers every year to cable, Internet and wireless telephony.

 

Janazzo also noted that the deal would not change the competitive landscape among cellular carriers, because Cingular is already an AT&T-BellSouth joint venture.

 

Justice Department officials said the proposed purchase would be reviewed by antitrust regulators, but offered no assessment of whether it was likely to generate objections.

 

The merger also needs approval from state regulators.

 

If either company calls off the merger, it may have to pay the other company $1.7 billion, according to a regulatory filing by AT&T on Monday.

 

The deal would substantially expand the reach of AT&T, already the country’s largest telecommunications company by the number of customers served. BellSouth is the dominant local telephone provider in the Southeast.

 

The merged company would have 70 million local-line phone customers, 54.1 million wireless subscribers and nearly 10 million broadband subscribers in the 22 states where they now operate.

 

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AT&T To Buy BellSouth for $67 Billion

CBS News, NEW YORK, March 5, 2006

 

AT&T Inc. is buying BellSouth Corp. for $67 billion in stock in a bid that further consolidates the telecommunications industry and would give AT&T total control of their growing joint venture, Cingular Wireless LLC.

 

The proposed purchase, announced Sunday, also goes a long way toward resurrecting the old Ma Bell telephone system, which was broken apart in 1984.

 

The merged company would have 70 million local-line phone customers and nearly 10 million broadband subscribers in the 22 states where they now operate. The deal appears to be the largest yet among U.S. telecom players.

 

In 1999, MCI WorldCom Inc. agreed to buy Sprint Corp. for an even larger sum, $115 billion, but that deal was blocked by federal regulators. Internationally, Britain’s Vodafone Airtouch PLC paid $180 billion in stock for Mannesmann AG of Germany in 2000.

 

The sale, which is subject to regulatory and shareholder approvals, would give San Antonio-based AT&T total control over Atlanta-based BellSouth’s nine-state network and its share of Cingular. AT&T currently owns a 60 percent share of the nation’s No. 1 cell phone provider, while BellSouth has 40 percent.

 

The deal would substantially expand the reach of AT&T, already the country’s largest telecommunications company by the number of customers served.

 

Together, the three companies employ more than 316,000 people, though that head count may fall as AT&T eliminates redundant operations.

 

After spending millions of dollars to re-brand AT&T Wireless Services Inc. stores as Cingular stores and hundreds of millions of dollars more on marketing the new Cingular after its $41 billion acquisition of AT&T Wireless in October 2004, Cingular will now become AT&T if the merger with BellSouth is completed.

 

The BellSouth name also would be absorbed in the deal.

 

“It’s going to be confusing,” said industry analyst Jeff Kagan. “This is the reinvention of the telecommunications industry.”

 

CBS News correspondent Bianca Solorzano reports if the deal is approved, only three survivors of the AT&T breakup will remain. That could force more mergers, such as between Verizon and Qwest, if they are to have any chance to stay in the phone game.

 

AT&T will pay 1.325 of its own shares for each BellSouth share. Based of Friday’s closing price of $27.99 for AT&T shares, that works out to be $37.09 for each BellSouth share, an 18 percent premium from the Friday closing price of $31.46 for the company.

 

AT&T Inc. was formed by SBC’s acquisition of AT&T Corp. in November. The deal added a substantial national reach to the former Southwestern Bell’s local business, which is concentrated in 13 states, including Texas, California, and the Midwest.

 

BellSouth is the dominant local telephone provider in the Southeast.

 

The shift in the U.S. telecom landscape — moving from four to three regional Bell operators — is sure to garner close review from Washington.

 

“Twenty years after the government broke up Ma Bell, this deal represents a mother and child reunion,” said Rep. Ed Markey, the ranking Democrat on the House Subcommittee on Telecommunications and the Internet.

 

“Our nation’s telecommunications markets must be vigorously competitive and open to innovation in order to promote job creation and economic growth,” Markey said. “This merger proposal is one that unquestionably merits the utmost scrutiny by government antitrust officials.”

 

Cingular representative Mark Siegel dismissed the notion there would be public perception issues with the switch back to the AT&T name for the wireless company.

 

“We built a business,” Siegel said. “Is the brand an important part of that business? Yes. However, it is a business that is made primarily up of people. None of that changes.”

 

Siegel said sole ownership by AT&T “gives us clarity of decision-making, and that is a good thing.”

 

With cable, companies increasingly vying for traditional phone companies’ share of local telephone service, such mergers in the industry have been commonplace of late. Kagan, the industry analyst, said more could be on the horizon.

 

“We’re not over it yet,” Kagan said.

 

The combined company will be based in San Antonio, and Ed Whitacre, AT&T’s chairman and chief executive, will keep those positions. His counterpart at BellSouth, Duane Ackerman, 63, will run BellSouth’s operations in a “transition period” after the merger.

 

Cingular’s headquarters will stay in Atlanta, as will the Southeast regional headquarters for the merged company.

 

Cingular has grown strongly since it was formed in 2001 by the merger of a number of regional wireless carriers, and there has been speculation that AT&T wanted to assume full control of this growth business, in part to be able to market it under the AT&T name.

 

The wireless operations will be the growth engine of the new company, and will account for one third of the combined revenue.

 

AT&T expects the acquisition to save it $2 billion annually, starting the year after the deal closes. About half of the savings would come from reduced advertising expenses and from combining their work forces.

 

The rest of the savings would come from combining the backbone network and information-technology operations of the two companies.

 

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Sprint Nextel will cut about 2,500 jobs in 2006

 

Sprint Nextel Corp. will cut its global work force by 4 percent, or about 2,500 jobs, in 2006, company officials said Wednesday.

 

Sprint Nextel spokesperson David Gunasegaram said he does not know how many of the cuts will be in the Kansas City area. He said the company is paring down its work force as part of a plan to rationalize its costs following Sprint Corp.’s August merger with Nextel Communications Inc.

 

Sprint Nextel (NYSE: S) has promised Wall Street $14.5 billion in cost savings and additional revenue in conjunction with the merger.

 

Gunasegaram said that the company will shed 4,500 jobs in 2006 across all its departments but that it will add 2,000 new jobs in growth areas, such as it’s voice-over-Internet business.

 

Some of the cuts will come from Sprint Nextel not filling open positions, he said. Gunasegaram said the company has not determined how many cuts will come through attrition.

 

The company ended 2005 with about 60,000 employees, including about 16,000 locally in Kansas City.

 

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“Organizations can routinely save more than 10 percent of their annual telecommunication expenses by systematically checking their carrier bills against equipment and services in use. Best practices include implementing telecom expense management packages.”

 

Gartner Group

 

“The U.S. telecom market will undergo major structural changes, influenced by heavy investment in next-generation technology, reduced regulation, and strong demand for IP telephony, Ethernet, and services.”

 

Gartner Group

 

“Substantial payback exists for telecommunications auditing functions, using both internal and external resources. Organizations should establish strategic relationships with third-party companies to ensure accurate billing.”

 

METAgROUP

 

 

 

“As the telecom industry collapses, many users are being trapped in agreements with financially crippled carriers, dead-end technologies, or services that are no longer cost effective.”

 

METAgROUP

 

 

 

“The broad turmoil in telecommunications markets has left many users with contracts from failing carriers as service quality dwindles. Through 2004, all users should seek alternative safe harbor telecom solutions.”

 

METAgROUP

 

“ US telecommunications giant SBC is acquiring archrival AT&T, in a deal worth approximately $22B in stock and debt assumption. Although there is some impact on corporate customers, the bigger impact is on the telecom market overall. For the two companies, this is a necessary move – AT&T had long courted a takeover, and SBC needed to advance its lagging IP services business and begin to compete for large enterprise customers. Traditional telecom companies must position themselves defensively to deal with future competition.”

 

METAgROUP

 

“Substantial payback exists for telecommunications auditing functions, using both internal and external resources. Organizations should establish strategic relationships with third-party companies to ensure accurate billing.”

 

METAgROUP

 

“Telecommunications represents a significant expense, with every dollar saved contributing to the bottom line. Yet most enterprises devote scant resources to its cost containment, contract management, and billing reconciliation. Best-practice demands greater reliance on independent review and possible outsourcing of some or all of these functions.”

 

METAgROUP

 

“Organizations are turning to services and tools offered by third-party suppliers to get a better handle on telecom procurement and life-cycle management. For large organizations dealing with multiple service providers, such services can vastly improve management capabilities and, at the same time, be very cost-effective, often resulting in a net savings of 5%-20%.”

 

METAgROUP

 

“Costs associated with managing telecom agreements are often overlooked. Users that fail to adequately resource this function will overpay for their telecommunications services.”

 

METAgROUP

 

“Aberdeen research found that companies employing initiatives underpinned by information technology solutions to proactively manage telecom costs are seeing value through validation, optimization, and outsourcing activities.”

 

AberdeenGroup

 

“We believe the opportunity for savings involves capturing the total costs associated with processing telecommunications expense, as well as optimizing the spend itself.”

 

“With that in mind, Aberdeen identifies three areas within the lifecycle of the telecom service procurement process that can deliver savings: validation, optimization, and outsourcing.”

 

AberdeenGroup

 

“Telecommunications services purchases are widely decentralized and poorly controlled at most companies. For large enterprises, telecom-billing errors can result in more than $8 million a year in lost profits. Ongoing savings through process optimization and improved insight into spending can provide compelling cost-savings opportunities.”

 

AberdeenGroup

 

“Telecom spending sucks up a significant chunk of the overall IT budget. According to estimates from Aberdeen Group, the average Fortune 500 company spends $116 million a year on telecom services. With figures like that, there’s a lot of room for waste.”

 

NETWORKWORLD

 

“Are your company’s wireless expenses starting to look as large as Martha Stewart’s legal bills? You may consider an option for slimming down wireless costs that remains little known or understood by many corporations: customized flat-rate plans.

 

Instead of buying buckets of minutes for each employee or a pooled bucket of minutes for employees to share, customized flat-rate plans let you pay as you go, at a set rate per minute, with no overage penalties. You negotiate the per-minute rate with any of the major national wireless carriers based on number of phones and a minimum number of minutes or dollars spent per user, per month.”

 

NETWORKWORLD

 

Analysts see small impact of SBC deal on enterprises

 

SBC’s announcement Jan. 31 that it intends to acquire rival AT&T may not have an immediate effect on most enterprise customers, other than a reduction in the number of employees servicing their accounts.

 

Analysts and telecom industry executives say the deal will have little immediate impact on telecom prices because of stiff competition from other telecom carriers that may also be looking at mergers.

 

While SBC executives have trumpeted the deal as giving their regional telecom company an international reach, some AT&T customers have expressed concern about job cuts that SBC has announced, said Richard Simons, chief operating offer of MBG, a telemanagement company that works with customers of both SBC and AT&T.

 

AT&T previously announced 12,500 layoffs in 2004, and SBC has announced it plans more than 12,000 job cuts if the acquisition is approved. “AT&T has already lost an enormous amount of knowledge over time,” Simons said.

 

However, Simons expects price competition among the remaining regional Bells as they acquire traditional long-distance carriers like AT&T and compete out of their traditional regions with the regional Bells.

 

Yosef Rabinowitz, managing director of TBRC Cost Recovery, agrees that price competition should continue even after the SBC/AT&T deal. TBRC Cost Recovery, a telecom expense management firm, helps small and mid-size businesses manage their telecom infrastructure.

 

“SBC’s acquisition of AT&T will likely have zero effect on enterprise customers,” Rabinowitz said by e-mail. “AT&T is already irrelevant in the marketplace. Their prices are just too high.”

 

AT&T charged customers more than some regional telecom resellers because of its name, Rabinowitz added. “For a long time, AT&T’s major selling point, at least to our clients, was effectively, ‘Of course we charge more. We’re AT&T! Can you really trust some fly-by-night carrier?'” he said. “A corporate purchasing manager whose job would be in jeopardy if the phones went down might have fallen for that a few years ago. But today, most people know that many other carriers provide an equal or higher level of service at much lower prices.”

 

Beyond the SBC/AT&T deal, many telecom analysts expect more consolidation of the industry. Recent news reports say long distance and Internet provider MCI is in merger talks with Qwest Communications International and with Verizon Communications. Most telecom analysts expect MCI to be the target of acquisition attempts from the three other regional Bells: Qwest, Verizon, and BellSouth.

 

The fixed-line assets of Sprint may also be an attractive purchase option for Verizon, Qwest, or BellSouth, some analysts say.

 

For enterprise customers, the AT&T acquisition signals a likely move toward fewer choices for telecom and IP services, with a handful of huge companies competing for enterprise dollars. The few remaining major carriers would offer a wide range of bundled telecom-related services, including traditional long-distance, data services and VoIP services.

 

It’s less clear whether fewer carriers will be good or bad for enterprise customers. Some analysts said fewer vendors will translate into less price competition, but others disagreed.

 

While some consumer groups have decried a narrowing of choices, competition among a handful of providers should provide enterprise customers with choices based on cost and innovative products, said Jeff Kagan, an independent telecom analyst.

 

“I do think a handful of very large companies offering everything to everyone will be good for competition, good for the companies and good for customers, both business and consumer,” Kagan said in an e-mail. “Then there will also be many smaller companies competing for smaller bundles or stand-alone services. I don’t know how many we’ll end up with, but even if we only have four or five big, national companies to choose from that would be fine for competition.”

 

IT analysis firm Gartner suggested an enterprise market controlled by fewer vendors may mean that prices will “stabilize” — in other words, cost competition may not be as intense as in the past, with fewer carriers in a consolidated market. However, VoIP, wireless and cable modem services will continue to put pressure on telecom prices, Gartner added.

 

In light of that growing competition from other carriers and cable companies, AT&T’s decision to merge with SBC makes sense, most analysts said. AT&T was caught in a tough position — as telecom customers ditch their land lines for wireless phones, AT&T sold off its wireless company to Cingular Wireless in October, and AT&T was having a difficult time competing with the regional Bells in the local telecom market, said Arthur Gruen of telecom consultancy Wilkofsky Gruen Associates.

 

“They were now in a position where they couldn’t offer bundled services,” Gruen said of AT&T. “On the cable side, they could offer bundled services, and the (regional Bells) could offer bundled services. They were getting squeezed on both sides.”

 

Job cuts part of SBC acquisition of AT&T

More than 12,000 jobs are likely to be eliminated in SBC’s planned acquisition of AT&T announced this week. Among the more than 12,000 jobs cut will be 5,125 networking jobs, 5,000 sales-related jobs and 2,600 corporate headquarters jobs, SBC spokesman Wes Warnock said Tuesday. Those numbers don’t include an 8% planned reduction in IT-related jobs at the combined company; Warnock didn’t immediately have an estimate of how many IT jobs would be affected.

 

The new job cuts are on top of a decrease of 7,000 SBC positions planned this year. SBC announced in January it would cut those jobs through attrition. AT&T announced in late 2004 it planned to cut 12,500 jobs, or about 20% of its workforce.

 

SBC expects that most of the acquisition-related job cuts can also be achieved through attrition and will be phased in over three years, Warnock said. The two companies currently lose about 1,200 employees a month through attrition, he said. SBC, based in San Antonio, Texas, has not yet decided what geographic regions the job cuts will come from.

 

“It’s natural that when two companies go through this, we get productivity improvements that lead to this kind of thing,” Warnock added.

 

SBC officials have said that the combined company will be able to eventually achieve $15 billion in cost savings, with up to $2 billion a year by 2008, by combining functions such as IT, sales and headquarters support. SBC on Monday announced its bid to acquire AT&T in a deal worth $16 billion.

 

The deal faces review by the U.S. Federal Communications Commission, the U.S. Department of Justice and more than 20 state public utilities commissions.