Qwest Throws Down Services Gauntlet with Microsoft Deal

Channel Partners

February 1, 1999

26 Min Read
Qwest Throws Down Services Gauntlet with Microsoft Deal

Posted: 02/1999

Qwest Throws Down Services Gauntlet with Microsoft Deal
By Peter Lambert

New-generation backbone carrier Qwest Communications International Inc., Denver, won’t
remain content as a long distance pipe seller for long, now that it’s powered by Redmond,
Wash.-based Microsoft Corp.’s technology and services.

Qwest’s new business services unit will attempt to couple far-reaching packet networks
with service creation and delivery platforms to develop the first and last house on the
networking block–a one-stop, end-to-end provider that theoretically could relegate local
access partners to the lowest-value chain level: only passing bits.

Qwest and Microsoft agreed to co-create World Wide Web hosting, commerce, software
distribution and managed virtual private network (VPN) services for corporations. In
exchange for Microsoft’s software licenses, corporate sales channels and a $200 million
cash-for-stock investment in Qwest, Microsoft gains a home for its Windows NT servers and
a share in services revenues, effectively making the software giant a service provider in
its own right.

At the same time, Qwest now can push itself into corporate premises to sell managed,
end-to-end services. "This constitutes putting the first floor on the house, with
some very important architects," says Qwest President and CEO Joseph P. Nacchio.

Qwest’s move toward value-add is "not just at the connectivity level, but all the
way up to services and applications," says Christine Heckart, vice president of
consulting for Boston-based research analysts TeleChoice Inc. Likening the Qwest/Microsoft
deal to Dulles, Va.-based American Online Inc.’s (AOL’s) 1998 purchase of Mountain View,
Calif.-based Netscape Communications Inc., Heckart says those four companies now
"have the potential to fundamentally change the way that businesses buy software and
connectivity and create trader networks and other communities of interest."

Nacchio says that Qwest has "no plans to resell" the services through
competitive local exchange carriers (CLECs) or Internet service providers (ISPs).
Projecting positive services cash-flow within two years, he says of local providers,
"What we need is their connectivity for some applications, and we may eventually open
up to wholesale."

In any case, the bar for added value is rising beyond simple end-to-end connectivity,
as sought through AT&T Corp.’s purchase of local cable operator Tele-Communications
Inc., Englewood, Colo., or through MCI WorldCom Inc.’s construction of its own, extensive
U.S. CLEC facilities. Former AT&T Consumer Services president Nacchio just may be out
to create an Internet-Age Ma Bell.

Sprint Opts to Build, Not Resell, DSL Facilities
By Jennifer Knapp

In a stark reversal from its June Sprint-ION (Integrated On-demand Network)
announcement, Sprint Corp. has chosen to build digital subscriber line (DSL) last-mile
links to its ION in 35 U.S. cities starting in 1999. Sprint President and CEO Ronald LeMay
says this is a strategic shift in emphasis in providing customers access to Sprint’s
national broadband network.

"Previously, our plans centered on securing agreements with CLECs (competitive
local exchange carriers) and RBOCs (regional Bell operating companies) for access to
digital subscriber lines and, alternatively, building facilities where it made sense to do
so," LeMay explains. "Now, Sprint’s primary approach will be to build its own
broadband connection facilities."

While building its facilities will not bring Sprint’s services to market as quickly as
the leasing option, says Jonathan Haller, network services analyst with Current Analysis,
Sterling, Va., the facilities-based approach will be more profitable for Sprint in the

Haller notes, too, that Sprint will not be subject to the current quality of RBOC, CLEC
connections. "The company will control its own buildout and depend less on the
notoriously slow-footed RBOCs and puny data CLECs to deploy DSL lines," he says.

The biggest deterrent now to the success of Sprint’s DSL offering, however, will be
time, Haller says. In addition to tacking six months on its time to market, Sprint also
will face the difficulties of securing collocation space and competing with existing DSL
offerings from NorthPoint Communications Inc., San Francisco, and MCI WorldCom Inc.,
Jackson, Miss.

Sprint’s ION service offerings will consolidate businesses’ networks and provide the
small office/home office (SOHO) market with extensive bandwidth over a single connection
for voice, video and data services. Customers with copper telephone lines, which carry 56
kilobits per second (kbps), must adapt those lines with DSL modems in order to realize
greater bandwidth.

Sprint’s plans to deploy broadband-enabling equipment–such as DSL access multiplexers
(DSLAMs)–initially to 1,000 central offices (COs) by 2000 will allow copper-based homes
to access data at speeds up to 6 megabits per second (mbps). The first full market,
commercial launch of asymmetrical DSL (ADSL)-based services in Sprint’s local service area
is planned for Charlottesville, Va., beginning in May. This will be followed later this
year by launches in selected areas of Las Vegas and in Sprint’s local service territories
surrounding Kansas City, Mo., and Orlando, Fla.

IXC Lights Hierarchical Internet Backbone
By Charlotte Wolter

Following similar offerings by next-generation carriers Qwest Communications
International Inc. and Level 3 Communications Inc., IXC Communications Inc. and Applied
Theory activated year-end 1998 Gemini 2000, a new nationwide Internet backbone network,
with OC-48 capacity scaleable to OC-192. Analysts say the announcement is heavy on
bandwidth and technical specifications but light on customer concerns, such as business
applications and coverage details.

The network, which the companies say is operational coast to coast, is based on
Internet protocol (IP)-over-synchronous optical network (SONET) technology and can deliver
65-millisecond transmission times from coast to coast.

IXC Chairman and CEO Ben Scott described Gemini 2000 as a next-generation network with
a "hierarchically constructed and controlled architecture, based on pure Internet
protocol over broadband fiber, capable of converging today’s communication formats and
ultimately enabling the rise of new ones." Company officials say the network is using
new fiber optic cable strung over existing IXC routes.

The network employs Cisco Systems Inc. 12000 gigabit routers, which receive feeds at
speeds from DS-0 to OC-48 and then feed directly to the SONET network. It uses
tag-switching to control the flow of packets so it can provide quality of service (QoS) to
a greater degree than in most Internet networks today. For instance, the Gemini network
has the ability to route packets from San Francisco to Washington without going through
other cities.

The first customer on the new network is NyserNet, a 23-member consortium of New York
state universities and colleges that will use the network to establish a virtual private
network (VPN) enabling collaborative work on demanding applications and problems.

According to analysts, the announcement gave a plethora of technical details, but few
insights into the business applications that will draw customers to the network.

David Cooperstein, senior analyst, telecom strategies, Forrester Research Inc., says
the network is differentiated by its hierarchical approach, as well as its ability to
integrate voice, video and data. But, he says, the network is very similar to the giant
networks being constructed by a Qwest or Level 3.

IXC was less specific about the applications, Cooperstein says.

"In today’s terms, one would buy bandwidth. In the future, one buys sales-force
automation in the network, and whatever bandwidth it takes to distribute it will be
embedded in the price they charge, not on a per-pipe basis," he says. "So you
will pay for the application, not the network itself."

Joe Struber, an analyst with Ryan Hankin Kent, says key details about IXC’s network
were not specified. "The question is, how much coverage do they have? I’m not saying
they don’t have broad coverage, but they didn’t provide details like route miles and
access points."

He adds that recent announcements by companies that include Level 3, Qwest and Williams
Network provided more specifics.

WinStar, Williams Swap Capacity, Cash
By Ken Branson

WinStar Communications Inc. and Williams Communications Inc. have started the new year
by swapping capacity and cash in what they say is a mutual leveraging of assets in the
service of complementary strategies.

New York-based WinStar will receive $400 million from Tulsa, Okla.-based Williams in
return for 2 percent of the capacity of WinStar’s fixed wireless broadband network. The
money will be paid to WinStar over four years. This means 2 percent of WinStar’s network
capacity is available to Williams, beginning with the 60 nodes WinStar has in operation
now. Eventually, that 2 percent will be available from 270 projected WinStar nodes
(WinStar calls them "hubs"), distributed however Williams wishes, so long as
Williams uses no more than 15 percent of any one node.

Williams will receive $640 million from WinStar over seven years in return for a
25-year indefeasible right of use (IRU) of 60,000 miles of dark fiber on its network. Dark
fiber is optical fiber which has been laid in the ground, but not "lit" by
optronics. WinStar will be responsible for lighting the optronics on its 60,000 miles. An
IRU allows the purchaser to act as if it owns the capacity it has acquired the right to
use, but without the headache of having to maintain the cable and the conduit in which it
lies. WinStar’s share of the dark fiber will consist of four fibers, each 15,000 route
miles long.

Asked why this deal, and why now, Gordon Martin, Williams’ senior vice president for
network services, says: "First of all, WinStar was seeking a strategic partner for a
wide area network (WAN), an intercity network, and we met that need. For us, the secondary
question is: Why wireless local access? As a wholesale provider, we have a number of
opportunities where we could supply wireless local access to our customers. It is
well-known that we have relationships with RBOCs (regional Bell operating companies) who
can potentially use that wireless local access out of region for their applications."

Martin says he has discussed the possibility already with some of his wholesale
customers, but declines to say which ones.

"We always wanted to have our piece of the optical core that exists in this
country, and by buying these four fibers, we get that," says William Rouhana, CEO of
WinStar. "Our view has always been that what we have is a scarce resource … and we
did this transaction according to that view of the world."

Analysts believe this makes sense, considering that "bandwidth barons" such
as Williams need fiber access to local markets. "We have long been proponents of the
view that the next generation of long distance carriers will need to own or control the
crucial local network assets–just as their forefathers have–in order to be
competitive," writes James Henry, telecommunications analyst for Bear Stearns &
Co. Inc. in New York.

Williams Communications, about to be spun from its parent holding company, Williams, is
a wholesale carrier with a network still in progress. It has built out 15,000 route miles
of a 32,000 route-mile network.

WinStar is a competitive local exchange carrier (CLEC) in the process of expanding into
100 local markets over the next five years. The company has announced its intention of
going into 45 U.S. and six international markets in 1999. It recently completed a $2
billion vendor financing deal with Lucent Technologies Inc., Murray Hill, N.J. (the
optronics equipment of which WinStar will use to light the dark fiber).

Vendors, Carriers Hop on IP Interoperability Bandwagon
By Charlotte Wolter

Six more companies have lined up to support Interoperability NOW! Profile, an Internet
protocol (IP) telephony interoperability effort that has been spear-headed by ITXC Corp.,
Lucent Technologies Inc. and VocalTec Communications Ltd.

The announcement came the same week in mid-December that a group of alternative
carriers, led by Level 3 Communications Inc., announced the formation of the Packet
Multimedia Carrier Coalition (PMCC), which is seeking to further the development of new
protocols to bridge between current circuit-based public switched telephone networks
(PSTNs) and emerging IP technology-based networks.

With Ascend Communications Inc., Cisco Systems Inc., Clarent Corp., Dialogic Corp.,
Natural MicroSystems Corp. and Siemens Inc. all on board, the Interoperability NOW!
Profile group is pushing to have interoperable gateways and gatekeepers, based on the
H.323 standard, available from a number of vendors by the second quarter. H.323 is the
current industry standard for IP telephony gateways, but the standard does not specify an
implementation. Consequently, each technology company did its own implementation, and most
vendors’ equipment has not been interoperable.

The effort has been driven by ITXC, which brokers minutes for termination of IP
telephone calls worldwide. ITXC had been operating two parallel networks, one using Lucent
gateways and one using VocalTec gateways, because the equipment of the two companies could
not interoperate. "It’s been a huge gating issue for the industry that they were not
interoperable," says Mary Evslin, vice president of marketing for ITXC.

ITXC wrote a document defining interoperability from a customer point of view and
brought together Lucent and VocalTec, who agreed to cooperate to develop an interoperable
implementation. The effort has taken about six months, under the leadership of ITXC’s Ed
Hirschman, senior product line manager. The two companies showed what Evslin calls an
"alpha" version at the Fall 1998 Voice on the Net conference, and now are very
close to publishing a final version.

The six new members of the group have agreed to make their gateways and gatekeepers
interoperable with each other’s products and with those from Lucent and VocalTec.

The final document, which was to be distributed for comment by the end of January or
early February, will be distributed to all the vendors and several standards bodies, and
the group will make modifications based on their feedback. "A month after that we
hope to finalize and be ready for vendors to deploy," says Lov Kher, general manager,
Internet telephony, Lucent Technologies. The group also plans to retain one or more
independent testing labs to ensure the interoperability.

The changes will be made via a software upgrade and possibly a board change, Evslin
says. Also, the group will have to monitor future changes in H.323, which is still in
development, and implement them when done. "By the beginning of the second quarter,
when all these vendors have new software releases out, we and anyone else who wants to can
share all of our footprint," Evslin says.

Concurrently, the PMCC group has formed to promote interoperability not only between IP
telephony vendors, but also PSTN vendors. Members of the group include Frontier
Communications, GTE Corp., ICG Telecom Group, Illuminet, IXC Communications Inc., Level 3
Communications Inc., NEXTLINK Communications Inc., NTT America, SBC Technology Resources,
Sprint Corp., TESS LLC, Time Warner Telecom and Williams.

"It is imperative, regardless of the underlying infrastructure used by a
carrier–whether it is circuit-based or packet-based–that service remains seamless to the
customer," says Lori Mullane, manager of business development at Illuminet.

Rather than just working with the ITU, where H.323 is being developed, the group
proposes to work jointly with the Internet Engineering Task Force (IETF) and the ITU in
standards development. It also is backing the MGCP (multimedia gatekeeper control
protocol), a new IP telephony protocol backed by Level 3, Bellcore and others.

Kher says the ITXC group is dealing only with H.323 at this time because that is the
technology most customers want to use. "Some customers are asking us to make sure
that we are not going to be left behind in terms of these other emerging protocols. But at
this point the majority of the demand is coming from H.323."

Lucent also is building a product that will translate between different gateway
protocols, anticipating that it may be some time before the industry settles on a single
approach to IP telephony.

e.spire Bids Farewell to Resale
By Ken Branson

e.spire Communications Inc. will resell no more. The move is part of a strategy to move
as many of the company’s 116,033 customer lines onto its own network as quickly as
possible, company officials say.

The move was greeted with approbation all around, from sober Wall Street analysts to
effusive bulletin-board habitues.

"Elimination of this low-margin means of providing service to customers will
certainly generate significant improvements in the company’s gross margin and will
generally improve the overall quality of its revenue mix," writes James Henry,
telecommunications analyst at Bear Stearns & Co. Inc., New York.

"I told (former CEO Jack) Reich to get rid of that loser a year ago," wrote
an anonymous blusterer on the Internet message board devoted to e.spire.

Anthony Pompliano, chairman and once again CEO of e.spire, acknowledges that resale
helped e.spire get established in many markets, but that its time is past. Now, however,
the company will concentrate on profitability, and that means getting customers on-net.

About 43 percent of e.spire’s customer lines are on-net. That means that about 57
percent of them have yet to get there. Company officials say their salespeople will not be
compensated for customers who receive their services off-net, that the company will
accelerate its deployment of facilities in key markets and that customers, in a few cases,
may even be cut off. However, they say that resale customers with multiple locations, some
of them in cities where e.spire has no facilities, will continue to be served on a resale

Prepaid Phone Card Businesses Tap Internet Sales
By Jennifer Knapp

Virtual prepaid phone card sales joined the ranks of retail, promotional and
collectible distribution channels with two web-based phone card launches at the end of
1998. RSL COM Primecall Inc., New York, and EconoPhone Inc., Paramus, N.J., now are
selling virtual phone cards on the Internet at www.callrsl.com
and www.prestocard.com, respectively.

Consumers can purchase the virtual phone cards by completing an online application.
Once credit card information is submitted, EconoPhone returns a personal identification
number (PIN) and toll-free access number by e-mail within a few minutes, while RSL COM
returns a PIN via e-mail after 24 hours.

The major discrepancy in return times between the two companies is due largely to
attempts by RSL COM to reduce fraud. RSL takes 24 hours to make sure that bank account
information is correct, says Alan Garratt, spokesman for RSL COM Primecall.

Authorization for EconoPhone’s Presto! Cards, on the other hand, is fully automated on
the platform, where a credit card service checks the account instantaneously on the
server, says Jeanne Foulon, director of marketing for EconoPhone.

Both companies have opted to discard the tangible phone card for the online service,
but they also maintain traditional prepaid phone card distribution channels for their
other prepaid products.

The online channel, however, will help the companies target specific segments of online

"We decided with Presto! we need to market to people who are online," Foulon
says. "College students are a great market for this because every student has an
e-mail address and access to the World Wide Web via his or her college and/or home, and
they are going to be making a lot of phone calls to home."

In addition to marketing to college students, EconoPhone will optimize international
rates by advertising with online travel information services, which accounted for $276
million of the $1.5 billion eMarketer reports was spent online in 1997. International Data
Corp., Framingham, Mass., predicts the amount of commerce conducted over the web will
reach more than $400 billion by 2002, reflecting a 1997 to 2002 compound annual growth
rate (CAGR) of 103 percent.

Primus First Public Carrier to Offer Agent Equity Program
By Khali Henderson

The board of directors of multinational carrier Primus Telecommunications Group Inc.
(NASDAQ: PRTL), McLean, Va., Dec. 16 approved an equity program for the company’s agents
in the United States, making it the first publicly held carrier to make such an offer. The
company has reserved 500,000 shares for the program, which was to roll out in January.

Director of Agent Sales Dave Schwartz says Primus will offer agents a billed-revenue
contract with a fluctuating commission schedule plus the ability to earn stock equivalent
to 10 percent of the quarterly revenue share growth. Agents must cross a $75,000 quarterly
revenue threshold to participate, and revenue growth must be $15,000 or greater than the
previous quarter. For example, Schwartz says, an agent earning $75,000 in the first
quarter and $95,000 in the second quarter would qualify for 10 percent of the revenue
growth ($20,000), or $2,000 in stock.

As of year-end 1998 Primus stock was trading at between $14 and $15 a share, but has
been as high as $31.25 and as low as $5.25 in the previous 52 weeks, according to Standard
& Poor. The company has market capitalization of $412 million, and revenues for the
nine months ending Sept. 30, 1998, were $359.1 million.

The stock earned by Primus agents is fully vested over two years in equal
installments–half on each anniversary. Agents that end their contracts with Primus in a
nonbreach situation retain only their vested shares; unvested shares revert back to the
company. The vesting period is accelerated if Primus is purchased, so agents will not lose
their unvested stock.

A similar program based on collected revenue is available to Primus agents based in
Puerto Rico. The company is considering extending the offer to agents in other countries.
Schwartz says the company has about 300 agents in the United States and Puerto Rico and
another 200 agents throughout the world.

Schwartz, who came to Primus under its acquisition of TresCom International Inc. on
June 9, 1998, says the program was designed to create partners. So many of the equity
offerings rely on events, such as an initial public offering (IPO) or buyout, which may
never materialize. In contrast, he says, this program offers real stock, not an option to
buy stock, as compensation and a carrot to high-producing agents, a primary sales channel
for the company.

Primus provides long distance telephone, cellular, data and video services to more than
200 countries with its own network of switching facilities. The company’s strategy is to
grow via acquisitions in newly deregulated markets with a projected high demand for
international long distance services.






PaeTec Communications Inc., SCI Long Distance

Dec. 17

PaeTec purchased SCI’s Florida/Texas-based long distance customer base; valuedat $2 million.

Completed as of Dec. 17.

Equalnet Communications Corp., S4 Communications Corp.

Nov. 24

Equalnet will issue 642,666 shares of common stock and issue a $240,000 note inexchange for S4 stock.

Pending due diligence and standard closing conditions. Expected to close infirst quarter of 1999.

STAR Telecommunications Inc., Group Long Distance Inc. (GLD)

Nov. 16

STAR to acquire all assets of GLD in exchange for $3.7 million cash.

Subject to shareholder, board and regulatory approvals.

Wavetech International Inc., DCI Telecommunications Inc.

Nov. 6

Wavetech, DCI signed definitive merger agreement.

Will hold shareholder meeting in first-quarter 1999 to approve merger. Subjectto due diligence, approval of NASDAQ.

Global TeleSystems Group Inc., NetSource Europe ASA

Oct. 9

GTS paid 4,037,500 shares of GTS common stock and $46.1 million in cash forNetSource.

Completed as of Dec. 2.

ICG Netcom, C3 Communications Inc.

Oct. 8

ICG Netcom will purchase 100 percent of C3’s interests in ChoiceCom.

Expected to close in 1999, pending regulatory approvals.

Bell Atlantic Corp., GTE Corp.

July 28

Merger agreement valued at $53 million.

Pending Federal Communications Commission (FCC), Department of Justice (DoJ) andpublic utility commission (PUC) approvals.

Davel Communications Group Inc., Peoples Telephone Company Inc.

July 6

Peoples’ stockholders will receive .235 shares of Davel Common stock for eachoutstanding share of Peoples’ common stock.

Completed as of Dec. 23.

AT&T Corp., Tele-Communications Inc. (TCI)

June 24

AT&T to buy TCI in an all-stock transaction valued at $48 billion.

Recieved DoJ approval Dec. 30. Pending approval of FCC and European Union (EU)commissions.

World Access Inc., Resurgens Communications Group (Cherry Communications Inc. &Communications U.K. Ltd.)

May 12

Creditors of Resurgens and the shareholders of Cherry U.K. will receive approximately3.7 million shares of World Access common stock valued at $140 million.

Completed as of Dec. 15.

SBC Communications Inc., Ameritech Corp.

May 11

Merger agreement valued at $62 billion.

Filed with DoJ July 20. Received European Commission (EC) approval July 23. Underreview by FCC, DoJ and Illinois and Ohio PUCs.

General Magic, Qwest Enter Market Trial

General Magic Inc., Sunnyvale, Calif., has entered a market trial with Qwest
Communi-cations International Inc., Denver, for a future service offering based on General
Magic’s Portico virtual assistant. The Portico assistant allows mobile phone users to
access, retrieve and act upon information using a normal speaking voice. The service
integrates voice mail, e-mail, address book, calendar and Internet content.

RCN Scrutinizes Commercial Offerings

In a separation from its bundled residential telephony focus, RCN Corp., Princeton,
N.J., has begun the evaluation of commercial business opportunities to leverage the excess
capacity on its 100,000-mile fiber optic network. While the company has not determined
exactly what these future offerings will include, it is considering services for
businesses for both wholesale and retail.

ACMI Now Serves Chicago Area

ACMI, a network marketing company, has begun selling long distance and local service in
the Chicago area for Equalnet Communications Corp., Houston. Equalnet now is able to offer
the local portion of its services through its recent acquisition announcement of S4
Communications Corp., a Chicago-based local, long distance, Internet, data, cellular and
paging provider.

PT-1 Settles Suit Against IDT

PT-1 Communications Inc., New York, filed action in the New York federal district court
charging IDT Corp., Hackensack, N.J., with trying to copy the trade dress of PT-1’s long
distance calling cards. In its filing, PT-1 asked the court for a restraining order that
would prohibit IDT from manufacturing, distributing, selling or advertising nine of its
prepaid phone cards.

The litigation was settled amicably between the two companies, but details of the
settlement were not disclosed.

DCI, IXC Sign International Agreement

DCI Telecommunications Inc., Stamford, Conn., formed an alliance in early December with
IXC Communications Inc., Austin, Texas, bringing the international carrier use of IXC’s
facilities. Under the agreement, IXC will acquire a 13 percent stake in DCI, which in turn
will collocate with IXC’s New York facilities in conjunction with the deployment of
switches in Italy, Spain and the United Kingdom. In addition, DCI will lease several
dedicated lines from IXC for traffic between Europe, the Far East and London.

France Telecom, Deutsche Telekom Seal Pact

France Telecom and Deutsche Telekom officially sealed the carriers’ longstanding
relationship in a cross-shareholding agreement. Deutsche Telekom purchased 20.5 million
France Telecom shares from the French State, and France Telecom purchased almost 50
million Deutsche Telekom shares from the Kreditanstalt fur Wiederaufbau (the German
State). This alliance brings the companies 2 percent of each other’s share capital.

Foremost on the allied companies’ list of business enhancements will be a focus on
international markets, in which they already are active in 20 European countries.

USA Global Link Purchases Transmission Capacity

In a step closer to completing its fully integrated Internet protocol (IP)-based
telecom network, USA Global Link, Denver, purchased transmission capacity on Los
Angeles-based Global Crossing Ltd.’s global fiber optic network. The high-speed broadband
routes supplied by Global Crossing will constitute a significant portion of the backbone
for USA Global’s Global InterNetwork system.

Sprint Gets Feds’ Business

Your tax dollars at work, so far as they support long distance telecommunications, will
be going to Sprint Corp. for the next eight years. Sprint has won the right to supply the
U.S. government with long distance service as part of the government’s FTS (Federal
Telecommunications Service) 2001 program. The contract, which guarantees a minimum revenue
of $750 million, was awarded by the United States General Services Administration.
Assistant Commissioner Bruce Brignull says Sprint and AT&T Corp., have offered
parallel service over the past decade. He says the prices negotiated with Sprint will save
the taxpayers 60 percent of what they’ve paid over the past decade.

FCC Rates Long Distance Companies in 1998 Scorecard

The Enforcement and Industry Analysis divisions of the Federal Communication
Com-mission’s (FCC’s) Common Carrier Bureau released its fourth edition of the Common
Carrier Scorecard Report. The report, which can be downloaded from the FCC’s website (www.fcc.gov), provides consumer information about
telephone-related issues and performance information.

During 1997, 108 long distance companies were served more than 50 complaints by the
FCC. The figure to the right shows the companies with the highest and lowest complaint

Group 1: Pilgrim Telephone Inc., Home Owners Long Distance Inc., AxcesTelecommunications Inc. and Group Long Distance Inc.

Group 2: BrittanCommunications International Corp., LDM Systems Inc., LDC Telecommunications Inc.andPreferred Carrier Services Inc.

Group 3: Winstar Gateway Network Inc., QCC Inc., Network Operator Services Inc.and North American Communications Inc.

Group 4: MCI Communications Corp., WorldCom Inc., VarTec Telecom Inc., AT&TCorp. and Cable & Wireless PLC

Source: 1998 Common Carrier Scorecard Annual Report


The Personal Communications Industry Association appointed Brent Weingardt vice
president of government relations. Prior to his appointment, Weingardt was regulatory
counsel for Iridium LLC, where he gave legal advice on regulatory matters before the
Federal Communications Commission (FCC), Congress and other federal agencies.

e.spire Communications Inc., Annapolis Junction, Md., promoted Douglas Hudson to
president of e.spire’s wholly owned subsidiary ACSI Network Technologies Inc. Previously,
Hudson served as executive vice president of e.spire and was in charge of ACSI Network
Technology’s launch in February 1998.

In addition, Anthony Pompliano, founder and current chairman of the board,
resumed his position as CEO as a result of the resignation of Jack Reich, former
president, CEO and director. Pompliano previously was co-founder and president of
Metropolitan Fiber Systems, the predecessor of MFS Communications Co. Inc., where he
served as president, CEO and vice chairman from 1988 to 1991.

Williams Network, Tulsa, Okla., has made several promotions for vice president
positions within its growing communications group.

Gordon Martin was promoted to senior vice president of marketing and sales; Joseph
Turcotte was promoted to senior vice president and chief operations officer;
Matthew Bross was promoted to vice president and continues as chief technology
officer; Ron Harden was promoted to vice president of marketing and business
development; Greg Floerke was promoted to vice president of engineering and
construction; and Paul Saville was promoted to network planning vice president.

Teltrust Inc., Salt Lake City, has promoted Vicki Pearson to vice president from
her position as senior vice president of business operations. Teltrust also promoted Gene
Knickrehm to vice president of sales. Knickrehm previously was a sales director for
corporate markets at Teltrust.

Wytec Inc., Santa Clara, Calif., a supplier of local multipoint distribution service
(LMDS) equipment for wireless telecommunications applications, has appointed three outside
directors with telecom and computer experience. These appointments include Frank Ianna,
president of AT&T Network Services; Dr. Michael Murphy, vice president of
market planning and strategic pricing for Qwest Communications International Inc.; and Bob
Marshall, managing partner of Selby Venture Partners and co-founder of Tandem
Computers Inc.

FCC Fills Chief Positions

Robert Atkinson has been named deputy chief of the Federal Communications
Commission’s (FCC’s) Common Carrier Bureau. Atkinson will oversee the bureau’s Enforcement
and Policy and Program Planning divisions. Prior to his FCC appointment, Atkinson was
senior vice president for legal, regulatory and external affairs for Teleport
Communications Group, Dayton, N.J.

The FCC also named Valerie Yates assistant chief of the Common Carrier Bureau. A
former member of the Common Carrier Bureau staff, Yates recently was an associate of
Levine, Blaszak, Block and Boothby LLP, where she represented large users of telecom
services in FCC proceedings concerning the deployment of advanced services, detariffing,
access charge reform and pricing flexibility.

Windhausen Named ALTS President

John D. Windhausen Jr. was named president of the Association for Local
Telecommunications Services (ALTS), which represents facilities-based competitive local
exchange carriers (CLECs).

Windhausen, who will represent the CLEC industry in legal, regulatory and commercial
matters, brings 15 years of telecom experience to his new position. Since 1996, he has
served as general counsel for the Competition Policy Institute, a nonprofit consumer
advocacy organization that promotes competition for energy and telecom services. In
addition, Windhausen served as adjunct professor of the Communication, Culture and
Technology Graduate Program at Georgetown University.

Earlier telecom pursuits brought Windhausen to Capitol Hill, where he was senior
counsel and counsel for the Communications Subcommittee of the U.S. Senate Commerce
Committee for nearly 10 years. Prior to that, he worked as staff attorney in the Federal
Communications Commission’s (FCC’s) Common Carrier Bureau.

This placement follows the resignation of former ALTS President Heather Burnett Gold in
September. Gold left the association to join Tampa, Fla.-based Intermedia Communications
Inc. as vice president of regulatory affairs.

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