Buddy system

Ameritech's plan to invest $3.4 billion to acquire 20% of Bell Canada, announced last week, will mean different things for each partner.

Gaining scale was a key motivator for Bell Canada, said Chairman and CEO Jean Monty. "Consolidation is forcing us to look at not only having great scope, which we believe we have here in Canada, but also having more scale, or having access to scale."

For Ameritech, the move is recognition that once the company is allowed into long-distance, some of its best opportunities may lie outside the U.S. Bell Canada, the dominant carrier in Ontario and Quebec, is a particularly good fit because important industries, including auto and steel, are centered around the Great Lakes-and trading partners on both sides of the border require frequent communication with one another. When Ameritech is allowed into long-distance, Montysaid, Bell Canada will look at moving its U.S.-bound long-distance traffic from MCI WorldCom, Sprint and AT&T to Ameritech.

Monty insisted, however, that Bell Canada will continue to market MCI's virtual private network services to large corporate customers under the terms of an existing agreement that expires in five years.

If Ameritech's merger with SBC Communications is approved, the combined company will have a strong presence throughout North America: SBC owns 10% of Mexico's Telmex.

Ameritech will send 12 to 15 key people to work with Bell Canada, said Ameritech Chairman and CEO Richard Notebaert-a methodology Ameritech has used successfully to leverage its investment in 14 European carriers. Ameritech's key people compare its processes with those of other carriers' to determine the best practices, which are then applied on a broader scale.

One area where regional Bell operating companies may be able to learn from Bell Canada is long-distance, said Lis Angus, executive vice president of Angus Telemanagement Group. Unlike the RBOCs, Bell Canada may offer long-distance.

Angus added that whereas previous management tried to improve Bell Canada's shrinking margins by cutting costs, Monty is focusing on increasing revenues. "In the North American market, Bell Canada has no chance to become a major player," said Angus. "Its choice is to align itself with one that will."

Through its investment in Bell Canada, Ameritech also obtains 12% of wireless carrier BCE Mobile and small percentages of Teleglobe and several other provincial telcos, including AtlanticCo (see related story on this page). Ameritech will not acquire any part of Nortel Networks, which is partially owned by Bell Canada's parent company BCE Inc.

AT&T BEEFS UP LOCAL SERVICES AT&T will offer local ATM service to 41 cities this year, creating end-to-end service on a single platform. AT&T's national and local ATM services now have service level agreements covering provisioning, network availability, restoration time, latency and throughput.

DOJ OKS MERGER The Justice Department last week approved the SBC/Ameritech merger. Under the terms of a consent decree, the companies must sell their overlapping wireless properties in the Chicago and St. Louis markets before the merger closes. The deal is still awaiting FCC approval.