Business, not government will shape "information superhighway," Telco execs agree; many considering mergers.

CHICAGO--(BUSINESS WIRE)--Dec. 19, 1994--Business, not government, should build the much-heralded "information superhighway." And consumers and business, not government, should set the standards for access to the highway.

Those were just two of the opinions of a group of 137 U.S. and international communications executives, representing 24 countries and 90 companies, who were surveyed at an industry gathering in Florida earlier this year.

The executives, part of a group who were hosted by Andersen Consulting at its sixth annual Customer Contact Forum, were asked to consider the implications of the phenomenom Andersen terms "Infocosm" -- the convergence of computing, communications and content, along with enabling computer software.

The group, most of whom hailed from traditional telephone companies, agreed by a margin of 61 percent to 16 percent that such telcos are better positioned than cable companies to profit from the new era of broadband, multimedia services. And more than half said their companies are considering merging with or acquiring other players on the information superhighway.

When asked who should financially support the building of the infrastructure for Infocosm, 39 percent of the group responded "businesses," with another 32 percent citing communications companies. Another 18 percent selected consumers and 7 percent content providers. Only 5 percent chose government.

The group also agreed that the marketplace, not government, should set new standards for billing and access to Infocosm services. A third asserted that communications companies should set standards, while nearly a quarter chose consumers and nearly a fifth chose businesses. Only about one in 10 said that government should set the new standards.

The group also identified business, rather than the consumer, as offering their own companies the most opportunity in the "Age of Infocosm." More than half (54 percent) said that large or small business customers will offer the greatest opportunity, compared with 26 percent who selected "individual consumers" and 18 percent who selected "private homes."

"Despite the high media visibility of video-on-demand, communications carriers are telling us that business, not consumers, will be the first and heaviest users of the information highway," said Al Burgess, worldwide managing partner of Andersen Consulting's Communications Industry Group. "In fact, our research shows that industries representing 76 percent of the American economy may see significant parts of what they do become `virtualized' -- made available through broadband multimedia services. This poses major challenges for businesses and workers who need to become literate in the new technologies."

The communications executives also view their companies as well positioned to profit from Infocosm. An equal percentage (38 percent) saw communications and content companies as in the best position to benefit, with another 24 percent citing software providers. None (0 percent) believe that computer manufacturers are in a leading position to benefit.

While the group asserted that telcos are better positioned to "win" in Infocosm than cable companies, they also acknowledged the need for major changes in their own companies. Fully 68 percent said their companies are currently "reengineering" their business processes in order to meet the emerging needs of Infocosm.

In addition, 59 percent said their companies are considering merging with or acquiring another "Infocosm provider" in the next five years, while another 30 percent said they "may be" doing so. Of those considering mergers, 45 percent identified a "content provider" as the likely candidate and another 31 percent identified a "communication provider."

"Though the early waves of telco-cable mergers have not always panned out, carriers recognized that a wide array of alliances are likely," Burgess said. "What's needed to make them work is not just sound financials, but a well-aligned sense of strategic purpose, and business processes that are reengineering to suit that purpose. In all likelihood, the carriers of 10 years from now will look nothing like those of today."

The telephone and cable executives responding to this survey represented all corners of the world. Ten percent were from the Asia-Pacific region, 2 percent from Canada, 19 percent from Europe, 6 percent from Latin America, 2 percent from South Africa, and remainder from the USA. Nearly two-thirds held the rank of assistant vice president or higher.

The meeting at which the survey was conducted, Andersen Consulting's Customer Contact Forum, is an annual by-invitation-only event geared to the communications industry, including telcos, cable companies and wireless carriers. It features a wide array of expert speakers who address timely communications industry topics. The next Customer Contact Forum is scheduled to take place at Walt Disney World in Orlando, Fla., on March 13-15, 1995.

Andersen Consulting is an international management and technology consulting organization whose mission is to help its clients change to be more successful. The organization works with clients from a wide range of industries to integrate their people, processes, strategies and technologies. Andersen Consulting has more than 29,000 persons in 150 offices and 46 countries. The firm's Communications Industry Group, with more than 3,000 telecommunications consultants worldwide, provides a wide spectrum of services ranging from strategic planning to the implementation of customer contact and network operations systems. -0- Editor's note: Andersen Consulting is not a division of accounting organization Arthur Andersen.

CONTACT: Andersen Consulting

Jim Sloan, 312/507-8108