The company has slowly been investing millions in new hosting facilities for Internet services, and, according to one Silicon Valley venture capitalist, has been kicking the tires at a number of Internet-hosting companies. This is all just the beginning of a push to become a full-service data company for big businesses when the regulatory hurdles come down.
And that's what critics are afraid of. CLEC executives contend the Bells have effectively driven them out of business by refusing to cooperate on the interconnection of equipment and sharing of facilities. In the Internet world, a debate rages over whether the Baby Bells are the key drivers - or the biggest obstacles - in the deployment of high-speed Net access. A related argument, one that's been batted around for more than a decade, surrounds the question of whether the Bells should be granted their biggest prize: permission to enter the long-distance telephone business.
It's been five years since Congress enacted the Telecommunications Act of 1996, a broad piece of legislation designed to fix the ground rules for competition across the telecom business. The act barred the Baby Bells from offering long distance and other services until there was real competition in their local phone territories. The idea behind this carrot-and-stick approach was simple: The Baby Bells were given a legal monopoly on local phone networks when they were born, so they ought to be required to support competition on that network.
But the Bells are tantalizingly close to throwing off those legal restraints, even though competition for local phone service has often been anemic. "The biggest issue for us is always regulatory. And the biggest regulatory issue is long-distance data," says Rich Dietz, president of enterprise services at SBC. "We are not allowed to compete with every other telco in the world. It is critical and crucial for us to compete in the long-distance businesses."
Across the country, regulators in a half-dozen states have already cleared the local phone giants to offer long-distance service. While the long-distance phone business is in a slump, largely because of fierce price competition, it's still a $70 billion market, and it has been simple for the Bells to enter. In Texas, where SBC was recently cleared to offer long-distance service, the company signed up 2 million customers in eight months.
The real victory will come when the Bells are cleared in every state, which they expect to occur early next year. "SBC's growth will come from data, from wireless and from long distance," says CEO Whitacre. "Our goal is to be the only communications company our customers will ever need."
