SBC long-distance ranks third in Arkansas after first year.

IN A SINGLE YEAR, SBC Communications Inc. captured enough long-distance telephone business in Arkansas to become the state's third-largest interexchange carrier, annual reports filed with the Arkansas Public Service Commission disclose.

SBC -- formerly known as Southwestern Bell Telephone Co. -- received permission to begin selling long-distance in Arkansas on Nov. 26, 2001, and had long-distance revenue of only $155,258 during the last five weeks of that year.

Then in 2002, SBC had assessable long-distance revenue in Arkansas of almost $17.5 million -- more than any others in the long list of also-rans behind market leaders AT&T and MCI WorldCom. (See list, Pages 20-21.)

"We are happy, and it is pretty much on target," said Eddie Drilling, SBC's Arkansas president. "In fact, it was a little bit beyond target."

SBC, which is unchallenged as the largest local exchange carrier in the state; last week began promoting an "all you can eat" bundle of unlimited local and long-distance service, priced at about $50 a month, and some new flat-rate and per-minute plans.

SBC's long-distance service is being marketed to the approximately 900,000 Arkansans for whom the San Antonio Baby Bell is already the incumbent local exchange carrier (ILEC).

Southwestern Bell's gains, and that of other smaller carriers, were made at the expense of AT&T of the Southwest Inc., the AT&T subsidiary doing business in Arkansas, and two of the three WorldCom Inc. subsidiaries that operate here.

AT&T's Arkansas-assessable revenue was $54.6 million last year, compared with $64.1 million in 2001. And WorldCom's total assessable revenue in Arkansas dropped from $54.5 million in 2001 to $45.1 million in 2002, despite healthy growth by WorldCom Network Services Inc. A related local service provider, MCImetro Access Transmission Services Co. LLC, reported $932,081 in assessable revenue in Arkansas last year, not enough to make the list of local exchange carriers.

Parent company WorldCom Inc. declared bankruptcy in July after revelations of multibillions in misstated earnings, a national scandal that undoubtedly contributed to the company's loss of revenue in Arkansas. But how much SBC benefited from WorldCom's troubles is hard to quantify.

"There was some response, but it wasn't as significant as you might think," Drilling said. "I'm not sure we can make a direct correlation."

Instead, he attributed much of SBC's inroads to "pent-up demand" from customers who simply want to do business with SBC. But he also credited old-fashioned marketing: print and television ads, direct mail and telemarketing.

Sprint Communications Co. LP, which trailed only AT&T and MCI in last year's list, dropped to No. 4 with $12.9 million in assessable revenue, down 4.3 percent from 2001. Meanwhile, CenturyTel Long Distance LLC of Monroe, La., reported $11.3 million in 2002, a 29 percent increase from the previous year.

Qwest Communications Corp. of Denver also enjoyed increased revenue, in part due to its acquisition of two other small long-distance carriers, LCI International Telecom Inc. of Denver and Phoenix Network Inc. of Golden, Colo.

The only new company on this year's list of interexchange carriers is Williams Communications LLC of Tulsa, which reported $2.6 million in assessable revenue last year In 2001, its $170,577 in assessable revenue wasn't nearly enough to make the list.

Two companies that were on last year's list of largest interexchaiige carriers, NOSVA LP of Las Vegas and Broadwing Telecommunications Inc. of Austin, Texas, dropped off the list this year because their assessable revenue in 2002 was below $1 million. Excel Telecommunications Inc. of Dallas, which had better than $5 million in assessable revenue in Arkansas in 2001, isn't on the list because it didn't file an annual report with the PSC by the March 31 deadline.

More than 150 interexchange carriers filed annual reports by the deadline, but the vast majority had no more than a few thousand dollars in assessable revenue in Arkansas last year.

Local Exchange Carriers

This year's list of the state's largest local telephone service providers (ILEC and CLECs--competing local exchange carriers) combines the totals for separate subsidiaries under a single parent company. For instance, SBC's total of $550.5 million in assessable revenue includes almost $8.5 million from SBC Advanced Solutions Inc., and Ailtel Corp.'s $104 million total includes $70.7 million from Ailtel Arkansas, the ILEC serving some areas of the state, and $33.3 million from Ailtel Communications, a CLEC that provides local service primarily to businesses in central Arkansas as an alternative to SBC.

The pecking order remains pretty much the same this year as last: SBC, followed by CenturyTel of Monroe, La., followed by Ailtel.

The $786 million in combined assessable revenue controlled by those three companies eclipses the dozens of other local exchange carriers in the state combined. The very distant No.4 on the list is Northern Arkansas Telephone Co. (Natco) of Flippin, which reported $7.4 million in assessable revenue, down from $8.3 million in 2001. Natco also operates a long-distance service, Natco Technologies Inc.; its $714,137 in assessable revenue wasn't enough to make the interexchange carriers list.

A mystery player is Sage Telecom Inc. of Dallas. It has provided well-advertised local service packages in Little Rock, Fort Smith and Pine Bluff since October 2001, and it is undoubtedly a big enough player to be on this year's list, but its revenue figures have not been made public. As it did last year, the company has filed a request for confidentiality that is being honored, at least until the PSC can act on the request.

A similar request by AT&T was denied last year.

A number of local carriers that were on the 2002 list are missing this year The most notable is Connect Communications Corp. of Bryant, Ted "Dub" Snider's controversial company that shut down in 2001 as a result of a dispute with SBC. Connect reported $8.65 million in assessable revenue in 2001; its report for 2002 claimed zero revenue.

Navigator Telecommunications Inc. of North Little Rock, which is also embroiled in a dispute with SBC, and Vartec Telecom Inc. of Dallas filed annual reports for 2002, but the PSC staff determined that there were reporting errors that prevented meaningful ranking.

Also dropping below the list's $1 million minimum were Decatur Telephone Co. of Decatur and Talk America of New Hope, Pa.

Several other local service providers that has appeared on last year's list are absent because they apparently did not file annual reports by March 31. Some may have received extensions on the deadline.