Phone companies take different paths Bell Atlantic is considered a leader Breaking up is HARD to do BELL BREAKUP: 10 YEARS LATER

December 26, 1993|By Michael Dresser | Michael Dresser,Staff Writer

When the Bell telephone monopoly bbroke up 10 years ago this week, Frederick D. D'Alessio thought he was in the wrong place at the wrong time.

Had the breakup occurred six months earlier, the mid-level manager with New Jersey Bell would have gone with the parent AT&T in the split. But because he was working in one of Ma Bell's regional affiliates when the music stopped, all he could do was grab a seat at this new regional phone company called Bell Atlantic Corp.

"There was this view that AT&T was the place to be and that it was going to be the shooting star," Mr. D'Alessio says. "The local companies would be like working for the water company."

Some water company. Ten years after its birth on Jan. 1, 1984, Bell Atlantic is widely regarded as the most progressive of the seven regional phone companies and one of the most dynamic companies in the telecommunications industry.

In October, Bell Atlantic's announcement that it would acquire -- the nation's largest cable-television company grabbed front-page headlines and put its chief executive in People magazine. And, next year, it is likely to become the first phone company to let customers order movies that can be viewed on their television sets.

"The local companies have gone through more change in the last 10 years than anyone thought was possible," said Mr. D'Alessio, now president and chief executive of Chesapeake & Potomac Telephone Co. of Maryland -- soon to be renamed Bell Atlantic-Maryland.

The next decade is likely to bring even more dramatic changes. Already, the Bell companies' era of friendly rivalry is giving way to fratricidal competition. There is no assurance that the seven companies celebrating their 10th birthday Saturday will still be around for their 20th. In the brave new world of telecommunications, the telephone company can indeed fail.

"I would be surprised if that doesn't happen to one or two [regional phone companies] over the next four or five years," said Daniel Burrus, president of Burrus Research Associates in Milwaukee and author of the book "Technotrends."

Bell Atlantic and its siblings were dubbed the "Baby Bells" almost from the day in 1982 when the antitrust settlement that would carve up American Telephone & Telegraph Co. was announced. In fact, they have never resembled any infant except Baby Huey -- the enormous diapered duck of comic-book fame.

They were huge companies at birth, virtually guaranteed a steady stream of cash in the vital but unglamorous business of local phone service.

Since then, the regional Bell companies have taken distinctly different paths. Some have been content to waddle along the familiar path of regulated monopoly; others have yearned to take flight. Some have clung to the familiar ways of the Bell System; others have sought to remake themselves in a new, entrepreneurial form.

And now, the regional Bells have settled into a reasonably clear hierarchy.

Industry professionals and stock market analysts generally cite Philadelphia-based Bell Atlantic, which serves the region from New Jersey through Virginia, as the technological and strategic leader. U.S. West, the Denver-based company that serves 14 states in the Pacific Northwest, the Rockies and the Plains states, is also ranked in the first tier.

Close behind comes San Antonio-based Southwestern Bell, which has moved aggressively to poach on its peers in markets outside a five-state core region that runs from Missouri through Texas. Its successful Cellular One operations have made Southwestern a familiar player in Bell Atlantic's prime Baltimore-Washington territory.

The middle tier is generally considered to include Atlanta-based Bell South, which serves most of the South east of the Mississippi River; Chicago-based Ameritech, which has hunkered down in its Midwestern bastion; and Walnut Creek, Calif.-based Pacific Telesis, which lumps the tiny Nevada market together with gargantuan California.

Virtually unanimously, industry observers cite NYNEX, which provides New York and New England with frequently criticized service, as the laggard in the group.

For all of these companies, the process of separation from Ma Bell was traumatic. The old Bell System culture was as supportive as it was pervasive. It sustained a deeply held sense of mission, and it took care of its own.

"You went to work for the telephone company, you could expect to retire from the telephone company," Mr. D'Alessio said.

Since divestiture, the old Bell System culture has crumbled under waves of staff reductions at each of the regional companies.

Increasingly, the reginal companies are looking for new lines of business in each other's territory.

So far, most of the challenges have come in businesses that exist on the fringes of local telephone service. With Congress poised to sweep away barriers to competition in their core business, the rivalry will intensify.

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