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From Rotary Dial to Internet, State Keeps Up With Technology.

Alltel, SBC Look to the Future of Broadband, Wireless in Arkansas

ARKANSAS got its first telephone in 1878.

More than 120 years later, the state that once marveled at the prospect of "talking over a wire" is home to one of the world's leading telecommunications companies, Alltel Corp.

From telephones to cellular phones to cable television to the Internet, Arkansas has remained in step with the latest in telecommunications technology. Competition among the likes of Alltel, Southwestern Bell Corp., GTE Corp., Internet companies and a host of smaller telecommunications service providers have made Arkansas an important market for tomorrow's communication tools.

Industry leaders say much of the future will be wireless service, the growth of which will supplant wired communications in areas excluding data transmission. New technology will preserve speed and quality, says George Page, Alltel's vice president for marketing.

"Kind of like the Dick Tracy wristwatch stuff -- that kind of hypothesis," he says, speaking of the comic crime fighter who wore a TV-radio communicator on his wrist. "Where you'll be able to get not just voice communication with wireless, you'll be able to get data and video loads as well, regardless of where you are."


In the 1950s, another telecommunications developer had a similar vision.

Harold S. Osbourne was the former chief engineer for the American Telephone and Telegraph Co. He foresaw Arkansans wearing a similar device, a combination telephone-television set with which they could contact anyone in the world. The watch-like device would be made possible by the invention of tiny Bell transistors that would replace the larger vacuum tube, he said.

Osbourne had seen adequate evidence suggesting that Arkansas would be on the cutting edge of telecommunications technology. Little Rock, after all, had the United States' third telephone switchboard installed in 1879. One of Arkansas' newspapers, the Fort Smith Southwest American, in 1917 was the first in the southwest to receive a news report (a cyclone striking Coffeyville, Kan.) by long-distance telephone.

Telephone service took hold in Arkansas after James Hamblett of the American Bell Telephone Co. first demonstrated the curious device in the offices of the Arkansas Gazette in 1878. Little Rock's Marion Hotel in 1906 was the first in the Southwest to have a switchboard. In 1922, rotary dialing came to 3,000 telephone subscribers in the state, who received instructions on how to place calls without the aid of an operator from an advertisement in the Gazette.

Within 30 years, the state would have its first lead-covered coaxial cable running between Little Rock and Memphis. The cable could carry phone conversations and television signals simultaneously.

And while AT&T grew to its gargantuan proportions, a little company in Arkansas called Allied Telephone Co. would begin operations in 1954. The company would lay the groundwork that would lead to its merger with Mid-Continent Telephone Corp. and the formation of Alltel Corp. in Little Rock.


Today, Arkansans are faced with a brave new world in which telecommunications companies have had to rethink their identities.

After years controlling telephone service throughout the country, AT&T was carved into smaller companies in the wake of an antitrust suit filed by the U.S. Justice Department (see "AT&T Divestiture Unleashes Baby Bells," page 38). As these "Baby Bells" took their first, feeble steps in the mid-1980s, corporate strategists had to learn to compete by staking claim to new technologies first. And once these companies latched onto what they thought was the Next Big Thing, the Internet appeared and forced them back to the drawing board.

Cynthia Brinkley, Southwestern Bell's new president for Arkansas operations, says the Internet provided a new medium for sending data. Now on the eve of a new century, the Internet is causing companies to completely change direction.

"In about probably another three or five years, probably less than that, you're going to have a situation where 90 percent going over the network is data and 10 percent is voice," Brinkley says. "So our society is changing because of that."

Page agrees. High-speed access to the World Wide Web is the new order of the next 100 years. Whereas companies once judged the quality of their product by the number of successful outgoing calls customers could place without error the future will find companies trying to increase speed and bandwidth.

High-speed Internet is shaking the telecommunications industry to its very foundations, shifting paradigms and flip-flopping sensibilities, Page says.

"Most of the data in the 20th century has been broadcast over television, over the airwaves," he says.

Not so in the age of the new medium. Now data transmission is going underground. Contrary to popular perceptions of a totally wireless society, data will physically travel across networks of coaxial cable or copper. The much-hyped wave of the future, High-Definition TV, can only travel across hard lines.

What consumers will see, then, is telecommunications companies' use of compression techniques and protocols to prioritize and fit more information in less space across wires.

"Wireless won't be able to usurp all communications, but I see a flip-flopping, where the dedicated facilities -- fiber, coax, copper -- are going to be primarily data delivery mechanisms," Page says. "Whereas wireless will be primarily lower-speed and voice [data]."

Evidence of these predictions can be found buried beneath Arkansas topsoil in new DSL technology, which both companies began operating this year.

Alltel was the first to unveil the high-speed Internet access service in Arkansas on July 26 in Harrison. The system offers asymmetrical digital subscriber line, or DSL, access to the Internet that is a blazing 27 times faster than a 56k telephone modem -- and allows simultaneous phone conversations on the same line. Industry leaders say the technology will boost e-commerce, telemedicine and distance learning.

Southwestern Bell, however, was not far behind. In October, the company introduced Project Pronto, a plan to roll out DSL service in the company's 13-state territory by 2003. The $6 billion project put high-speed Internet access first within reach of users in Little Rock and North Little Rock. It is the first foray by Southwestern Bell's parent company, SBC Communications Inc., into the broadband market.

Others will follow. Comcast Cablevisionof Little Rock, for example, plans to get in on the broadband game next year as it revamps its cable television service and offers cable modems, which will allow cable subscribers Internet access on their cable service's coax line.


Wireless technology, telecommunication's other hot medium, will remain a priority for telecommunications companies, though Brinkley and Page remind those dreaming of an untethered, electronic lifestyle that wireless will carry less-complex, voice information.

'Not everything's going wireless," Page says. "God only created so much spectrum. Anything below a certain level of spectrum, people can hear in a normal conversation, so you've got to [work] above that...

"So there's only so much spectrum we can use."

But wireless will remain part of a lucrative package of services companies hope to provide consumers who want one-stop shopping for their telecommunications needs.

"Customers really would like the simplicity of one company they can go to to provide all their telecom needs - be it local service, long distance, Internet, wireless, cable television - all that under one roof, under one bill," Brinkley says. "That's kind of what all the companies are racing to provide."

Southwestern Bell included. The company lacks a crucial service to fill its goal of being a comprehensive telecommunications provider: longdistance telephone service.

Obtaining that service is the company's top priority, Brinkley says.

Like other regional Bell companies, Brinkley's company is prohibited under the 1996 Telecommunications Act from offering long-distance service until it proves it has opened local service markets to competition. Brinkley says SBC is working toward filing an application with the Federal Communications Commission to offer long-distance service in Texas. Obtaining permission there would clear the way for the company to do the same in Arkansas.

Brinkley says Arkansas is a "thriving"market with "enormous" competition. With companies like Alltel and Gabriel Communications of Missouri making great strides in the Natural State, it's difficult to argue with her. In fact, competitor Page calls Southwestern Bell's entry into the long-distance market "a given."

"When we do our strategizing over here, and we think about the Bells entry into the LD) business we say they're going to be another formidable competitor in a marketplace that's already congested with formidable competitors," he says, citing AT&T, MCI WorldCom, Sprint, Frontier Corp. and Quest Telcom International.

"But how how well will they be able to compete with prices that are already down to a nickel?" he asks. "I mean, when you start saying, 'I can do it for 4 cents,' is that a yawner? I think a lot of the price shakeouts in the LD business has already occurred."

Page says dirt-cheap long-distance service means companies will have to focus on the extras of their service packages to be competitive. Core services, like wireless and Internet, are the ones that matter now, he says.


* 1905 -- Little Rock's first underground cable is installed.

* 1912 -- The Southwestern Telegraph and Telephone Co is dissolved and made part of the Bell telephone organization.

* 1918 -- GTE begins when John O'Connell, Sigurd Odegard and John Pratt buy the Richland Center Telephone Co. The company is reorganized as the General Telephone Co. in 1935. and John Winn becomes the first president.

* 1926 -- Operators Arkansas take an average of 7.3 minutes to put through a long-distance call. In 10 years, that time will decrease to 1.5 minutes.

* 1927 -- Transatlantic phone service opened, putting Arkansas subscribers within reach of London phones.

* 1929 -- The Great Depression sets in and Southwestern Bell Telephone Co. loses more than one-fifth its telephone subscribers in Arkansas.

* 1936 -- Telephones in Arkansas can reach telephones in all part of the country and in more than 70 foreign countries and islands. In the state there are more than 86,000 telephones, and more than 525,000 local calls and 12,000 long-distance calls are handled daily.

* 1941 -- The United States enters Word War II with 112,000 telephones in the state. Arkansas will add only 30,000 telephones during the next four years.

* 1951 -- The telephone celebrates its 75th anniversary.

* 1952-54 -- Demand for television channels rises. A UHF station, KRTV-TV, is established and later purchased by Pine Bluff's KATV-TV. The VHF station KARK-TV also is established.

* 1954 -- Little Rock and much of Arkansas taps into the national long-distance dialing network. Operator dialing makes long-distance calls possible with no stops in the connection.

* 1954 -- Microwave communications makes possible the first five broadcast of the Arkansas Livestock Show in Little Rock. Meanwhile, KATV begins building its permanent broadcast tower on Granite Mountain South of Little Rock.

* 1963 -- Allied Telephone Co. and Mid-Continent merge to form Alltel Corp. of Little Rock. By the 1990s, the company employs about 4,100 in Little Rock.

* 1984 -- AT&T is reorganized and Southwestern Bell becomes an independent company. The reorganization stems from an antitrust suit the Department of Justice filed in 1974.

* 1985 -- Alltel launches its first wireless system.

* 1993 -- Alltel opens its first wireless retail store, purchases GTE's independent telephone directory publishing contracts and acquires GTE's Georgia telephone properties.

* 1994 -- Alltel is named to the S&P 500 Index.

* 1996 - Alltel begins offering long-distance service. The company also announces plans to become a full-service provider in Little Rock and Charlotte, N.C.

* 1996- President Clinton signs the Federal Telecommunications Act, which lifts restrictions to create local competition and create a framework under which telephone companies can provide television services and cable companies can provide telephone services.

* 1997 Alltel signs a seven year agreement with Colonial State Bank of Australia to create and operate a comprehensive information and telecommunications system.

* 1997 -- Arkansas receives a second area code; Bellcore, which governs North American codes, assigns the 870 code to repterlisti the supply of available numbers.

* 1997 Arkansas Act 77 rewrites the states telephone laws for the first time in 60 years. The act opens the local telephone market to competition in compliance with the Federal Telecommunications Act of 1996.

* 1998 Southwestern Bell launches a digital wireless net work in Arkansas, with sights on covering the entire state.

* 1998 Alltel merges with 360 Communications a cellular telephone company with about 75 million customers.

* 1999 Alltel acquires Aliant Communications of Nebraska, adding 308,000 wireless and 293,000 wire line customers in the Midwest.

* 1999- CenturyTel Inc. purchases $843.35 million in Arkansas phone lines from GTE. GTE says it sold the lines to. finance new wireless territories and and invest in other growth opportunities.

* 1999-In the year's second quarter, Alltel estimates it's gained 32,000 business lines - or 40 percent of the city's business lines - in Little Rock. By comparison, Alltel had gained 8,000 customers, or 3 percent of the business lines, in Charlotte in about a year.

* 1999 - Southwestern Bell Works toward an application to the FCC to offer long-distance service in Texas, after which the company plans to apply to offer the service in other states, including Arkansas.

* 1999-2000-- Alltel plans to challenge incumbent local service carriers in eight new markets in North Carolina and Virginia.


DEMOCRACY abhors a monopoly. Just ask Microsoft founder Bill Gates, who's probably spent hours huddled with a cadre of blearyeyed attorneys studying one of the century's biggest antitrust suits, which ended in the divestiture of telecommunications Goliath AT&T.

AT&T and the Bell System had, at their inception, functioned as a legal monopoly. Government regulation, according to AT&T president Theodore Vail in 1907, was an appropriate substitute for a competitive marketplace. The U.S. government agreed.

Until it changed its mind.

After federal administrations investigated the monopoly and alleged abuses, and the technology of telecommunications evolved, the Department of Justice filed antitrusts suits against AT&T. The 1974 suit was settled in 1982 when AT&T agreed to divest itself of the Bell operating companies, which provided local service.

Divestiture took place Jan. 1, 1984. AT&T's seven regional local service divisions - Southwestern Bell, Pacific Bell, US West, BellSouth, Ameritech, Bell Atlantic and NYNEX - were made into independent operating companies. AT&T continued to provide long-distance service but in a fiercely competitive market.

Southwestern Bell's president of Arkansas operations, Cynthia Brinkley, says the years after divestiture was time for the Baby Bells to develop an identity. Competition didn't arrive until the late 1980s, she says.

Bells Eligible for LongDistance

Once companies settled themselves and began seeking the technology that would hurl the industry into the next century, additional government regulations took effect aiming to encourage competition among the companies.

The Federal Telecommunications Act of 1996 was the granddaddy of such measures. Once again, it allowed the seven Regional Bell Operating Companies (RBOCs) to re-enter the interstate long-distance market, if their market was open to competition. The act also allowed telecommunications and cable service providers to provide television and local telephone services.

Arkansas Act 77 of 1997 was passed to comply with the Telecommunications Act. The first major rewrite of the state's phone law in more than 60 years, the Act 77 attempted to put state telecommunications competitors on equal footing. The act opened the local telephone market to competition and allowed the best price and service to win in the marketplace.
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Comment:From Rotary Dial to Internet, State Keeps Up With Technology.
Author:Turner, Lance
Publication:Arkansas Business
Geographic Code:1U7AR
Date:Dec 27, 1999
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