RealTime IT News

SBC Predicts Job Cuts, Consolidation

Executives at SBC Communications , the second-largest incumbent local exchange carrier (ILEC) in the U.S., predict minimal revenue growth in 2002, prompting more job cuts and other operational efficiencies to bring costs in line.

The local- and long-distance phone carrier predicts only a 1 to 3 percent growth rate for the year, generating $1.5 to 2 billion after dividends are paid out to shareholders.

To bring revenue relief, SBC expects to continue with job cuts (the company has laid off roughly 7,500 employees in the past five months) throughout the year in areas "not directly impacting customer service or responsible for growing data or long-distance revenues."

To accomplish that goal, SBC plans to consolidate call centers throughout its coverage area and upgrade the remaining with improved call-response systems to handle incoming calls. All told, the carrier expects to save $700 a year from the consolidation.

Officials weren't available for comment on an approximate number of job cuts they expect to make in 2002.

Further customer service improvements include SBC's "Tech of the Future" program, which puts wireless Internet-enabled laptops in the hands of field technicians. Already, 25,000 employees are armed with the remote access to SBC's database of information. When completed, the "intelligent field devices" will save $250 million a year in total costs.

SBC officials expect continued growth in its digital subscriber line (DSL) and digital wireless phone ventures in 2002. They predict 2 million DSL subscribers by year's end and its wireless phone venture with BellSouth , Cingular Wireless, continues to show improvement.

SBC executives expect even bigger DSL numbers "when the regulatory requirements and costs become more certain for all data/broadband providers."

With SBC's continued expansion in the long-distance market, in states where the Public Utilities Commissions (PUCs) and the Federal Communications Commission (FCC) have given their blessing, officials will soon begin marketing the service to it asynchronous transfer mode (ATM) and frame-relay customers.

Another moneymaker for the carrier is its re-entrance into long-distance markets the past year, the "holy grail" for the four Baby Bells (SBC, Verizon Communications , Qwest Communications and BellSouth) since AT&T was forced to break up it's long-distance and local telephone services in the early 80s.

SBC currently has long-distance approval in Texas, Missouri, Oklahoma, Kansas, Arkansas and Connecticut.

So far, the carrier is stymied with efforts in seven states (California, Nevada, Illinois, Ohio, Michigan, Indiana and Wisconsin ) to gain long-distance approval, which SBC officials say is critical to the carrier's future. Five of the seven come from Ameritech-held states, which was acquired by SBC in 2000, and is currently awaiting approval until regulators are convinced the carrier is upholding competitive agreements promised in the merger agreement and the Telecommunications Act of 1996.

It's not likely SBC will get approval any time soon, however. The FCC has repeatedly fined the company for violating the Ameritech-SBC merger agreement, and the hiring of a former U.S. Secretary of Commerce to president has so far met with little success.