Data players all aboard? >BY LIZA HENDERSON

Many telcos spent sleepless nights counting dollar signs from voice services in anticipation of the day the Telecommunications Reform Act of 1996 would be signed. The long-distance companies are salivating over the huge opportunity in local voice while the local companies are ravenous for those long-distance minutes.

One need not wait for the big ball to drop in New York's Times Square welcoming 1997 to experience the onslaught of fierce voice competition. Service providers are already using incentives to win market share-including flat rate for peak and off-peak hours, dime- or nickel-a-minute rates, no surcharges on calling cards, free voice mail trials and rebate checks. Some carriers are even mailing out bestseller business books.

As competition becomes more fierce, what will happen to the margins in this business? "Free long-distance calls on Fridays" may just be a stepping stone to "free long-distance calls every day." Think of all the emerging players with nothing to lose and no installed base to protect. Why not give away the voice to get the data network?

With the popularity of the Internet, its funding from the government, growing numbers of households with PCs, exponential growth of broadband business services such as frame relay and ATM, and the increasing demand for high-speed multimedia applications, it's time to pay attention to the data strategy.

Although total data revenues are miniscule compared with voice, margins are often much better, with some carriers achieving up to 40% and annual growth rates reaching into the triple digits.

If you think data is important to your company's future success, you have to start positioning today. That means getting experience, increasing credibility as a data provider, and creating value-added service options and packages. If you don't establish the foundation now, where will this leave you in two years?

A lot of jockeying for position is going on in the data market today, especially by those providers that feel data services will eventually amount to a larger percentage of the average household monthly bill than voice services. Data can be used to pull through voice by creating packages for residential users, telecommuters, businesses and so forth. Or, free voice can be used to pull through the more lucrative data business.

The rules are changing nearly as fast as the competitive landscape, and a new competitor class is emerging. It includes Internet service providers, cable TV companies, competitive access providers, and possibly even satellite broadcasting companies, utility companies, software companies, network/systems integrators and equipment/appliance manufacturers. The danger is that these companies could be instrumental in creating a new set of rules to play by. In this future world, data may be king.

Some of these companies are already sending early warning signs that they can pose a credible threat-software companies that integrate Web browsers and Internet access with their applications software, for example, or cable operators that plan to offer Internet access and even telephony services using cable modems.

Although some may not consider each group alone as a significant threat, partnerships between key players in certain groups can create a powerful force and redefine the way telecom business is conducted. Because most of these companies have applications rather than WAN expertise, they may be able to develop creative services that can be easily understood by the mass market.

Although voice services may bring home the bacon today, data may lock the business tomorrow. The market won't wait while existing players concentrate on securing their voice business. Providers will emerge to fill the current market demand for data services and to proactively create new markets for higher-speed residential, small office/home office and business data services.

Being successful today simply gives you the right to come back and compete tomorrow. There is no guarantee that even the biggest service providers will survive in the market over the next three, five or seven years. What is your strategy for success?

Liza Henderson is a Broadband Consultant with TeleChoice, Verona, N.J. Her e-mail address is lhenderson@telechoice.com.