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Key word for Alltel is convergence; Little Rock first for bundled telecommunications services.

Little Rock First for Bundled Telecommunications Services

Before April ends, Little Rock-area residents will have a new, one-stop shop for Internet, long-distance and wireless services.

Alltel Corp.'s recently announced plans to converge three business units into one company has significant local implications, says Dennis Whipple, president of the new entity, Alltel Communications.

"In Little Rock, a consumer, a residential customer, will be able to purchase Internet, wireless and [long-distance] services at one retail establishment, talking to one sales person," says Whipple, who was formerly president of Alltel's mobile communications division.

Little Rock is the first market where Alltel will implement the unified company's single-shop, one-stop services, but not the only one to see the changes, Whipple says.

"We are working to include others," he says. "We are on our way, and we will evaluate What we do here and how to improve for other markets. This is not a test."

The Little Rock-based company, with annual revenue of more than $800 million, revealed plans to merge its traditional wireline telephone, mobile communication and Internet services into one organization last month.

Previously, three business units - Alltel Telephone Services Corp, Alltel Mobile Communications Inc. and Alltel Communications Inc. - independently sought and serviced customers.

For the business customer initially, Alltel is constructing a fiber-optics ring that will move the company into the local telephone business in the capital city by the end of summer or early in the fall, Whipple says.

"The fiber ring will be targeted to the business customer," Whipple says. "For businesses we will also offer them corporate Internet services."

Alltel announced in June 1996 its plans to provide a comprehensive package of services to the Little Rock market by the summer of 1997. Whipple says the company is on target and should be able to expand the local telephone service option to residents early in 1998.

Scott Chesbro, former president of Alltel Communications Inc. and now an executive vice president of the new business unit, says the company will pick and choose the markets that will provide the most return in which to offer the unified services. Statewide bundling services in Arkansas may or may not occur, depending on what's in the best interest of Alltel, he says.

Chesbro says Charlotte, N.C., where another fiber-optics ring is being constructed, likely will be the second market for the bundled services offered by Alltel, but no time table was disclosed.

Longtime Goal

Bundling services by Alltel is a first-of-its-kind move, company executives say. Whipple says forming one business unit to attract and maintain customers has been an Alltel goal for some time.

The move is being driven by two forces, he says. First, telecommunication companies can provide several services, such as long-distance, wireless and Internet access. Second is the implementation of the federal Telecommunications Act of 1996, which allowed for more digital services and created more competition.

"All of these things are driving the competition for customers," he says, "and creating a customer who wants ease of purchase and ease of transaction and to deal with one company."

Whipple says Alltel has been moving forward with digitized services for the past few years and has a wide range of offerings for customers.

"With [Alltel] it was not whether or not[bundling] would happen, but when it would happen," he says. "Having the organization under one corporate umbrella is huge advantage to us."

Ramkrishna Kasargod, a telecommunications industry analysts at Morgan Keegan & Co. in Memphis, says bundling services is the trend in the telecommunications industry. He agrees that Alltel is in a good position to be a leader of providing the bundled services through one company.

Whipple insists converging the three communications businesses into one unit is more than meshing headquarters. He says the move "is part of a long-term strategy to expand our position in the marketplace."

"We looked at markets," he says. "We started with the customer."

Alltel will not provide the bundled services along traditional regulatory boundaries, Whipple says, opting instead for customer-driven "communities of interests" and defined geographic areas where customers do business.

"From a customer's perspective, I don't think the customer cares what's behind the delivery process as long as customers can get the services they want, at a time they want, at a price they want and hassle-free," he says.

Serving Seven Markets

Alltel services currently exists in seven markets: the Carolinas, Georgia, the Mid-South (Mississippi and Alabama), the Northeast (Kentucky, Ohio, Pennsylvania and New York), the Southeast (Florida and part of Georgia), the Central (Arkansas, Oklahoma, Missouri and Memphis) and Texas.

Reporting to Whipple in the new business structure will be four other executives. Chesbro will become the executive vice president of marketing and business development; Mike Flynn, president of Alltel's telephone group, has been named EVP of communications operations; and Jim Gadberry, president of Alltel's telephone service corporation, will be EVP of finance and administration.

An EVP for network planning and technology has not been selected.

Currently, Alltel has an overlapping of wireless and wire line services in about 55 percent of its seven markets. Flynn says the largest overlapping exists in the Southeast from the Carolinas through Arkansas, Missouri and Oklahoma, with plans to create overlapping services in the Northeast and Texas. Neither Flynn nor Whipple would specify when overlapping services in those two markets would be provided.

"In the Northeast ... we have not acquired any licenses [for wireless service] for strategic reasons," Flynn says. "We could only afford to do so much, and we would be building from scratch [in the Northeast]. What we intended to do is evaluate every make-buy decision."

Flynn defines a make-buy decision as one in which Alltel decides either to acquire licenses for service, or buy the services from a reseller.

Streamlined Business

In in-house publications, company officials heralded the creation of the new business unit as a streamlining strategy that would create jobs. Whipple, without being specific, says the move to one business division "will create a number of jobs over a five-year period."

"People may be displaced as we redeploy assets," he says "People may be moving from one job to a new job. We do know that we'll be adding jobs, though."

He says the jobs will include engineering and technical positions as well as sales spots.

Alltel Corp.'s stock, which is traded on the New York Stock Exchange (symbol: AT), has remained in the low $30s since the announcement.

RELATED ARTICLE: Orsini Happy With Role

Tom Orsini, an executive vice president at Alltel Corp. who was reported late last year to be leaving the company, says he's content in his role with the Little Rock-based telecommunications firm.

"Late in the year in 1996, with all the things that were going on in the industry and taking place at Alltel," Orsini says, "I moved back to corporate and have been working with Joe [Ford] and Scott [Ford] and Jeff Fox, basically on strategic issues facing the industry and facing Alltel."

Joe Ford is chairman and chief executive officer of Alltel Corp., and his son, Scott, is Alltel Corp.'s executive vice president. Fox is president of Alltel Information Services Inc., a job he accepted in 1996.

Arkansas Business reported in November 1996 that there was speculation of Orsini's pending plan to leave Alltel in January. Orsini responded through the public relations department that he was not leaving the company.

There may have been some confusion about Orsini's future with the company because he had been the corporate officer to whom officials with the company's Information Services division reported directly.

After Fox became president of Information Services, Orsini no longer received reports on the division and instead began working on overall company strategies, Orsini says.

RELATED ARTICLE: Alltel Banks on New Business Process

Officials at Alltel Corp.'s Information Services division recently unveiled a comprehensive business process that reduces administrative costs associated with processing and servicing financial institutions' accounts.

Alltel Information Services Inc., a division of Alltel Corp., provides information processing management, outsourcing services and application software to the financial, mortgage, health care and telecommunications industries.

Jeff Fox, president of Alltel Information Services, says the new business process service goes beyond traditional outsourcing of item processing and evaluates a financial institution's complete business operation.

A savings bank based in Wilmington, Del., has signed a five-year deal to use Alltel's full-business process outsourcing.

The announcement of the new process comes only two months after Alltel Information Services-Healthcare, an Alltel subsidiary, joined with Integrated Healthcare Solutions Inc. (IHSolutions) to form a new company that provides health care information management services.

The new company, Eclipsys Corp., will use Alltel network development and implementation and other management services for four years. About 800 Alltel employees joined the new company.

George Smith, a spokesman for Alltel Corp., would not reveal the amount of revenue or the percentage of Alltel Information Services' profit associated with breaking out its health care unit to form Eclipsys.

At the time of the deal in January, the company announced that Alltel received about $154 million in cash and preferred stock, which is convertible into 15 percent ownership of the privately held Eclipsys Corp.

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Title Annotation:Alltel Corp.
Author:Lee, Simon
Publication:Arkansas Business
Date:Apr 7, 1997
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