Edward Whitacre Jr., the Texan who heads SBC Communications Inc., raised many eyebrows among state utility regulators a few months back when he linked his firm’s layoffs of 11,000 employees to rates set by regulators for the wholesale service SBC must sell to competitors.
Whitacre got a chance to see many of those state regulators face-to-face in Chicago this week when he addressed a convention of their national organization.
But rather than repeat allegations that low-ball wholesale rates have put SBC on the road to ruin, Whitacre delivered a fairly subdued talk. He still decried existing rates and government rules intended to promote local phone competition, but Whitacre called for their revision.
He said SBC will happily offer wholesale service to rivals, if only the rates enable his firm to cover its cost and make a fair profit. And he seemed downright calm about things.
Some in the audience wondered if Whitacre was just being polite, but others believe his smiling visage was genuine because he fully expects that by early next year the Federal Communications Commission will significantly alter the current wholesale rate structure.
Last summer when Whitacre and other Bell execs launched the attack on wholesale rates, the competitors didn’t think much about it. SBC and its peers had been fighting competition since a federal law endorsing it passed in 1996. For the most part, the Bell execs have been losing the battles, including a recent decision by the U.S. Supreme Court endorsing the FCC-mandated rate structure.
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But recent statements from Michael Powell, the FCC chairman, have convinced the Bells’ competitors that changes will come to the current mandatory wholesale system that is responsible for consumer choice of local phone companies.
Their main hope at this point, said Wayne Huyard, president of mass markets at MCI, a unit of WorldCom Inc., is that Bell rivals can influence the nature of the changes sufficiently so they don’t completely stifle competition. “We’re in a life or death battle,” he said.
Birds of prey: The spat over wholesale rates has spawned an interesting advertising war that looks more like election-style mudslinging than commercial marketing.
AT&T and its allies run ads promoting the image of SBC as a wolf in sheep’s clothing, while SBC portrays its rivals as, among other things, birds that fly in and roost on its phone lines.
For all the money they’re spending on this feud, the players apparently do see how odd, and even humorous, it looks.
At one session of the Chicago confab of the National Association of Regulatory Utility Commissioners, the president of SBC Ameritech Illinois, Carrie Hightman, told a gathering that when choosing what to wear for the occasion she opted not to wear her sheep costume.
In response, Joan Campion, a WorldCom executive, said she had decided against dressing “like one of those ratty birds that lands on your pristine lines.”
Will customers care? After launching wireless service in Chicago under its own brand for the first time, U.S. Cellular Corp. chief Jack Rooney said he expects that ultralow promotional rates and a huge local calling area will get the attention of customers and rivals.
If he can get someone to try the Chicago-based carrier, Rooney expects that superior customer care will win that person’s loyalty. While other carriers focus on flashy technology and low rates, U.S. Cellular bets old-fashioned service will win the day. “I want the competition to focus on us while we focus on the customer,” he said.