Deloitte & Touche Consulting Group study finds significant potential for redistribution of market share among telecommunications providers.

WASHINGTON--(BUSINESS WIRE)--Dec. 12, 1996--Who receives the billions of corporate dollars spent on telecommunications services could shift in the coming year, according to a survey of corporate telecommunications managers by Deloitte & Touche Consulting Group.

Results of the third annual National Telecommunications Competition Survey show that many large corporations intend to switch from their current local exchange carrier (LEC) to an interexchange carrier (IXC) for local exchange service. Furthermore, end users clearly prefer IXCs over LECs for meeting their "one-stop shopping" needs.

Key findings include:

-- Seventy-five percent of large business customers indicate they

would prefer to use IXCs over all other carriers to meet their

one-stop shopping needs, while only 21 percent favored the LECs.

-- Thirty percent of respondents indicate they intend to switch

from their current in-region LEC to an alternative local

exchange provider, assuming equal levels of service and price.

-- Seventy-seven percent of those who plan to switch from their

LEC say they will switch to an IXC. Last year, 67 percent

noted they would switch to an IXC.

"The study indicates the potential for a significant redistribution of how telecommunications services are provided," said Steve Martin, Principal, Deloitte & Touche Consulting Group, and co-author of the study. "This is not surprising considering the Telecommunications Act of 1996 marks a profound shift in power from providers to consumers of telecommunication services."

The study includes data from more than 500 decision makers who purchase telecommunications services and equipment for their organizations. Among the participating organizations, representing financial services, manufacturing, transportation/utility, food & beverage/retail and the public sector, 54 percent spend more than $5 million annually in telecommunications expenses, making them among the largest telecommunications customers in the United States.

IXCs Rate Higher Than LECs, Both Have Room For Improvement ----------------------------------------------------------

When comparing IXC and LEC performance across a variety of service attributes, end-users indicate by a 2-to-1 margin higher levels of satisfaction with their IXCs; however, despite the advantage that IXCs maintain over LECs, the study reveals across-the-board room for improvement by both carrier segments. Both IXCs and LECs receive their highest end-user satisfaction scores for their ability to provide prompt and effective network problem resolution. However, IXCs receive low marks for their ability to provide customized billing and reporting, while the LECs receive low marks for service customization and flexibility.

"Unprecedented levels of provider performance and innovation will be required to win and retain these sophisticated and demanding customers," said Robert Mayer, senior manager, Deloitte & Touche Consulting Group and co-author of the study. "Providers must demonstrate a keen understanding of the criteria customers employ in evaluating their performance."

Account Teams Key To Customer Satisfaction ------------------------------------------

Over three quarters of respondents indicate their satisfaction with a provider is directly dependent upon the quality of their account team. Two-thirds of all respondents agree or strongly agree their propensity to remain with a provider directly depends on the quality of their account team. While the importance of the account team is clear, only 42 percent of respondents report being very satisfied with their IXC account teams and only 18 percent are very satisfied with their LEC account teams. Thirty percent of respondents describe themselves as very dissatisfied with their LEC account teams.

"Account teams are integral to the loyalty a customer feels toward the provider," said Steve Martin. "Therefore, providers must harness their human, financial and technical resources to continuously meet rising customer expectations."

The survey, co-authored by Steve Martin and Robert Mayer of Deloitte & Touche Consulting Group, was distributed to approximately 3,500 managers of telecommunications services in large U.S. enterprises.

Deloitte & Touche Consulting Group's Telecommunications and Electronic Services practice serves leaders in each segment of the telecommunications marketplace, including wireless, local exchange and access carriers, long-distance providers, and telecommunications and equipment manufacturing.

Deloitte & Touche Consulting Group, one of the world's leading consulting services practices, is part of Deloitte Touche Tohmatsu International, a global professional services firm with over $1 billion in consulting revenues worldwide, providing an array of services to industries including manufacturing, health care, financial institutions, retail customer business, telecommunications, public sector and utilities.

Deloitte & Touche Consulting Group partners with clients to create change that produces results.

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