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.