27% Increase in Long Distance Providers Who See High Churn Rate, Data Services to the Rescue.

BOSTON--(BUSINESS WIRE)--July 28, 1999--

ATLANTIC-ACM, an international strategy and research firm specializing in telecommunications, has completed its annual study on the opinions and projections of long distance carriers in the United States. An increase in customer churn rates is one of the many findings in ACM's "U.S. Long Distance Telecom Resale Services: Trends and Opportunities 1999-2003." The percentage of switchless resellers surveyed with a monthly residential churn rate of more than 5% increased from 15% in 1997 to 28% in 1998. In addition, the number of switchless resellers surveyed who experience a 3% to 4% monthly churn rate with business customers rose from 5% in 1997 to 32% in 1998. Facilities-based respondents fared slightly better, but saw an increase in churn nonetheless.

"This increase in customer churn is the result of a variety of drivers, including falling prices and heavy competition," says Dr. Judy Reed Smith, CEO of ACM. "With margins shrinking for traditional long distance services, many carriers are expanding into new value-added areas where competition is less fierce and margins are more substantial, including data services."

To combat customer churn, many respondents are listening to their users. Heightened customer demand for a variety of data and enhanced services has prompted many carriers to diversify their offerings beyond the traditional one plus (+1) service. Data services, by far, offer the most room for growth. In fact, nine of the top ten services to be added by carriers surveyed are data centric. 40% of the respondents to the new ATLANTIC-ACM study plan to add Digital Subscriber Line (xDSL) to their mix by the year 2000, while 35% plan to offer Internet Protocol (IP) telephony services. Other services include Virtual Private Network (VPN), dedicated Internet, Asynchronous Transfer Mode (ATM), and frame relay.

"It is obvious from our findings that resellers, like most telecom providers, are worried about increased competition, as well as the customer's awareness of available alternatives," explains Dr. Smith. "This report is essential for any telecom professional who is interested in the future of the overall long distance market." Analysis includes: services added, marketing strategy effectiveness, operational concerns, facilities choices, sales channel potency, margin changes, capital needs, and finance issues. ATLANTIC-ACM analyzes companies by facilities-based carriers versus switchless resellers, and offers a comparison of companies by gross annual revenue tier.

"U.S. Long Distance Telecom Resale Services: Trends and Opportunities 1999-2003" is available for U.S. $2,950. For more information or a copy of the report's table of contents, contact ATLANTIC-ACM at One State Street, Suite 1000, Boston, MA 02109, Tel [phone], Fax [phone], by e-mail at [e-mail], or visit our web site at www.atlantic-acm.com.

ATLANTIC-ACM Inc. is best known for its exclusive analysis on the competitive telecommunications industry in the United States. The company offers authoritative public reports on the industry, proprietary consulting to companies in converging networked communications, and merger/acquisition counsel. Using proprietary databases with a portfolio of modeling processes and decision-support methodologies, ATLANTIC-ACM assists clients in evaluating telecommunications opportunities for successful investment, market entry, and long-term business planning.