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USTSA President Offers Seven Keys to Improving User-Vendor Relations.

As most of you are aware, the same telecommunications suppliers are now available to all of you as well as to the telephone industry.

Until recently, we as suppliers to the telecommunications industry dared not even think of selling our products to anyone but to the wire-line franchised telephone companies for fear that our life blood would be cut off. We in the industry always thought that selling telephones or other products directly to the telephone customers was like selling guns to known criminals.

Telephones in possession of any private party who happened to have one were usually "hot", or at least we regarded them as hot. We usually cut the cord off and took it and didn't give any compendsation. We probably threatebed to disconnect phone service if a user put an "authorized attachment" on the line again and we might have back-billed them a couple years.

It wasn't until the 1977 to 1978 time frame that the FCC terminal equipment registration program finally went into effect and after many delays, was actually cleared for connecting customer-owned telecommunications equipment (we call it terminal equipment) to the network under the registration program.

Prior to that time those "protective arrangements" cost the telephones company about $135 a line.

It cost money and was an economic waste. We at Suttle Apparatus never did manufacture the devices, although we kept thinking "is there time to still get into this non-sensible business and recover our start up costs?" We just couldn't believe that would last until the next sunset. I don't know what they have ever done with all of those "protective couplers." They sold million of them. I assume by now they are all long since sent to the junk yard. One of the options on that thing was to wire straight through and bypass the entire mechanism, hich was probably the option used the most.

Mark Fowler, chairman of the FCC, said that in his opinion the deregulation of terminal equipment and the registration program was probably the FCC's finest hour. He really means it. Telephone companies probably don't agree completely--at least not yet.

PBX's and key systems did make us big money. And telephone companies that owned a lot of key systems and PBXs, and who were good enough marketers to have a lot of extensions rented out to their customers, were regarded as a premium telephone company because they had this very good return on these items. But the fact that there was such a good return on those items gave rise to the very reason why we are probably here today--that is we all wanted to be able to install our own systems. As Mark Fowler said, it was a $15 to $40 tariff a year to connect up an extension telephone that you can now buy for $19.95. So there were a lot of reasons for people to fight for things such as the Hush-A-Phone and Carter-Phone decisions--that really cleared the way. Massive Increases in Local Service

This has, however, led to some rather massive increases in local service because these items were subsidizing local service and, of course, as these things became less of a monopoly for the telephone companies, the costs had to be recovered someplace. It has led to a proliferation of telephone terminal equipment. Businesses and residents alike now have full access to the network.

The toll network has also come under fire and is another reason why some of us are here today---to help in your choice of long-distance service. The toll network has been fractured, needless to say. MCI, Sprint, ITT and others are in that business. We estimate that about 31 percent of large users are involved in some form of bypass--bypassing the traditional telephone network.

Thinking about the significance of one particular bit of statistics is interesting. Some six percent of the telephone customers in the US occupy 61 percent of the network time. That's an awesome figure and if those six percent start dropping off the network, you can imagine what would happen to the cost for those who stay on. I'm not sure you would be able to pay your own phone bill at home if this keeps going. So the telephone industry obviously is working toward taking the subsidy out of toll and putting it back on the local-rate payer. End of Toll Subsidies

People in the industry, and Congress and certainly the FCC, believe in the universal telephone service concept that came out of the 1934 Communications Act. Needless to say, nobody would want to plow tha last five miles to a rancher or build a telephone system with an average of 1.6 customers per mile of line without he toll business. Toll has been one of the major subsidizers of local service, but the FCC and everybody realizes that it has come to an end because of competition.

If you're doing some feasibility studies on ownership of your own toll bypass facilities, don't necessarily crank in today's toll rates. You're going to have to assume that these rates are coming down.

I would like to offer seven ways in which users can improve the relationship between themselves and vendors. I could start out by saying vendors--but I also include users--should dedicate themselves to learning the needs of the particular customer.

Secondly, make sure the vendor is one that needs to do a good job of training sales engineers so they have a good product knowledge. Standing Behind the Product

The third ingredient often can be described as ethics. Who stands behind the product? Who will the customers turn to when there are service problems? In reference to selling, how much is too much product? I can tell you that bells and whistles on key systems and PBXs are great for the salesman, but when it comes down to using them, I would have to say that the thing that users should really need to beware of is undersizing the system. Our own telephone manager told me that in his 20 years experience, most users undersize the system. They will put bells and whistles on a PBX, ending up with a 192 line PBX when they already have 165 lines and think they are not going to grow anymore. They'll pop up in 6 or 7 months wanting a bigger switch and then nobody is happy. The vendor looks bad for not convincing them to spend the extra bucks, the telecommunications manager looks bad for not buying big enough.

The fourth point is honesty. Be really forthright with each other, both the telecommunications manager and the vendor. Lem Tate, director of Northwestern University, Telecommunications Services in Evanston, Illinois, leads a joint telecommunications venture between Northwestern University of Evanston and Northwestern Memorial Hospital. Lem says, "The vendor who gets the most attention from someone in my division is the vendor who is absolutely frank and honest about the limitations of the equipment."

My fifth ingredient comes from Beth O'Connor, telecommunicatons manager for DePaul University. She cited the case of one vendor who was so anxious to get DePaul's business, they bypassed her and went straight to the college president. Well she warned the president and the result was no sale. This is something vendors have to be concerned about, but it is also something users should be concerned about. Every once in a while the boss gets into the act, goes straight to somebody and messes things up. We sit in a very precarious position because we have to keep everybody happy and sometimes we are walking on egg shells. We would like to work with that person who is the "point" person on the project because there is going to be a tommorrow. More to Equipment Than Hardware

The sixth point is vendors and users should realize that there is a lot more to the equipment than just the hardware. I can quote Carole Howard of AT&T. She said, "Equipment is not the issue, its the whole package. Users are interested in service and having one contact who will handle the whole thing. AT&T Information Systems has what we call 'service plus.' That is a special service which offers, in essence, one stop shopping. We will write a contract for you, take care of maintenance, and depending on your needs, provide all kinds of services for eight hours, one day or two days . . . whatever."

Under this point we can put post-sale vendor support. If a communications manager makes a purchase from somebody who isn't around a little bit later, the telecom manager is going to look bad.

I think I can point out something in a story. In the 1880s in New York, before electric power, there was a clock tower. The time was so accurate that the owner of this building took pride in the fact that so many New Yorkers would stop to set their watches by that reliable clock. One day this weight-driven clock broke down and the owner fired off a telegram to the factory in New England, urgently requesting repair. The manufacturer, the kind of vendor I hope we have in our association, dispatched a repair crew by the next train.

What surprised the owner was that shortly after the repair crew arrived, the clock went back into service while the repairs were still obviously underway. Huffing and puffing the owner climbed up the tower and he was amazed to find that some of the men were busy at the repairs and the others were laboring to turn the gears by hand. That was the reason the clock could still provide the correct time while being repaired. That is the kind of follow-up we would like to see today.

We acquired an interconnect company that had distributed a brand of French switches. It was a good switch but it was a very precarious arrangement. There were a number of the switches around in schools in the Minneapolis-St. Paul area. Luckily it had behind it, as a partner, Reliable Electric from Chicago. When we acquired that bankrupt interconnect company, those users were in a very precarious position and we were too. We had one person who was trained on that switch, nobody else in the Minneapolis area and few in Chicago were, and we were not able to train another person. It was very difficult and expensive to train a person. So here we sat with a primadonna service man who liked to come to work just about whenever he wanted to, do whatever he wanted to and we were as much at peril as the customer who had the switch. Will Suppliers Be Around Tomorrow?

Well we tiptoed through that for about four years, got them cleaned up and found someone who could manage this person. We sold them the firm and they are off and running and I hope for the best. But it could have been a disaster for any of them if it hadn't been for Reliable, someone with a good financial means and then ourselves. We had the financial wherewithall to pick up this company and move it along for about four years. Really take a good look at your suppliers to make sure they are people that are going to be around tomorrow.

Point seven concerns specifications. Obviously you can specify to death. You can have consultants. I remember in one case the reason there were so many of one particular switch in the Minneapolis area was because the schools always seemed to hire the same consultant, and he happened to like one type of switch. We were not paying him under the table or anything, in fact, they were all sold before we got involved in the company. But the person liked that one switch, and it just seems like the specs always suited that switch so well that almost nobody else could get the job. You have to be careful to be sure that your consultant is objective.

There are some specs that are industry standard and you have to be careful . . . even down to the connection devices that we manufacture.

I represent the United States Telecommunications Suppliers Association based here in Chicago, made up of 625 member companies . . . and it really does include everybody. We even have, for instance, Anaconda Ericsson, the Swedish-owned company and some other foreign companies that have manufacturing facilities in the United States. We sponsor a couple major telecommunications shows a year. The next one is February 12, 1985 in New Orleans, and you are all welcome.

These showcases are worth attending. We just sent 18 of our own people to the last showcase. These are the places where you bump into sales engineers, other engineers, very technical people, top management people, and they are all willing to talk. It's the best way to improve your relationship with your vendors. Take your time and look around. We are offering free registration for telecom managers at the showcases.

The second major event that we have next year is Intelexpo, which is set for April 15 through 18, 1985 in Washington, DC. The third showcase is May 21 through 23 in Las Vegas, and that winds up our 1985 calendar.

It is not often that we waive the $30 admission fee that is normally charged. USTSA's telephone number is (312) 782-8597, call for more information.
COPYRIGHT 1984 Nelson Publishing
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Article Details
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Author:Sampson, C.
Publication:Communications News
Article Type:transcript
Date:Dec 1, 1984
Previous Article:Accelerating Pace of the Industry and Other Trends Hold Great Promise for All.
Next Article:Telecommunications Seen as Offering New Opportunities for Increased Productivity.

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