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September 27, 1999

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Competition and consolidation present challenges for old and new telecom providers

By Brian Riggs

ew competition caused by deregulation and advances in technology has transformed the telecommunications industry. IT managers at telephone companies and other telecommunications service providers have to deal with an entirely new business landscape. Mergers and acquisitions are now common in an industry that saw little change over decades. New services are now brought to market in a matter of weeks rather than months or years. And customers who once were locked into a single service provider can now shop around, forcing once-aloof monopolies to pay more attention to customer service and service quality.

IT teams at these telecom companies have the challenge of implementing these changes. A job that once focused on building and supporting monolithic mainframe systems now involves creating and introducing new revenue-generating services that are central to the company's overall health.

"My job is basically revenue enhancement," says Steve Ingram, CIO of Excel Communications Inc. "Running the IT shop is important, but the value I add is in being able to fill up our marketing channel with new products and services as rapidly as we can."

For many telecom companies, that means adding staff. Sprint's IS organization, for instance, has grown by about 35% annually for the past three years. Sprint now employs about 3,000 software developers and about 200 data-center operators.

The changes also mean bigger budgets for IT managers. Tom Schill, senior director of IS at US West Inc., says his budget jumped 18% this year, and that most of the increase is to rearchitect IT systems and support new service deployments.

Money-Maker
The main task for most telecom IT departments today is to build, deploy, and support new services that will create additional revenue streams. They need to create systems that can be used to turn out new services in a matter of weeks or months. The problem is that telecom companies have traditionally deployed operations support systems that provide billing, ordering, provisioning, and other functionality for each service deployed. These mainframe-based legacy systems typically don't communicate well, if at all, with one another. That's why migrating away from such systems is a top priority for many companies.

Excel Communications, which markets long-distance services to residential consumers, plans to start offering a wide range of local services by the middle of next year. "I don't want to create an entirely new operating support system for local services," says CIO Ingram.

To deliver local and other services more quickly, Excel is replacing six legacy billing applications with Kenan Systems Corp.'s Arbor billing system. The Kenan software will serve as the basis for all existing and upcoming services, eliminating the need to write new applications to support the provisioning, ordering, and billing of new services.

Excel has things easy compared with telecom companies that have been around much longer and have scores of separate services and systems. Add to that the mergers and acquisitions that characterize this market, and many telecom companies are finding they have to integrate the systems of acquired companies at the same time they're trying to update their own systems.

AT&T, for example, is developing a billing system that supports its voice services and the services offered by AT&T Broadband & Internet Services, formerly known as cable television operator Tele-Communications Inc. SBC Communications Inc. has seen the number of legacy systems it has to manage multiply after it merged with Pacific Bell, acquired Southern New England Telephone, and began the acquisition of Ameritech.

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