Global Crossing refocuses: With U S West out of the picture, what's next?

After losing U S West to Qwest Communications, Global Crossing still is taking home local and long-distance provider Frontier Corp. However, the five-week battle over the RBOC is forcing the company to rethink its plans for future growth.

To build market staying power, another network must be found, and Frontier alone will not satisfy that need, said Robert Annunziata, CEO of Global Crossing. "If we see something that's the right price, we will go forward with an acquisition," he said. Although he regrets the loss of U S West, Annunziata said now "it's back to business."

So where will Global Crossing fill in the gaps? Annunziata was tight-lipped on the subject, but one analyst speculated that the most logical step would be a competitive local exchange carrier acquisition.

"The best thing that they could do is buy a CLEC," said Melanie Posey, an analyst with IDC. She pointed to Intermedia Communications as a possible target but also noted that other mid-tier CLECs, such as GST Communications, e.spire and ICG Communications, also are likely.

Those companies would offer facilities-based networks in large metropolitan areas that then could feed into the Frontier network and Global Crossing's undersea network.

Global Crossing will seek a nationally scoped U.S. player, said Mike Smith, managing director at Stratecast Partners. "Someone with national assets in place - like Sprint, for example." Global Crossing needs a company with the scale to make it a sustaining force in the industry, and it will take something much larger than Intermedia or WinStar, he added.

Industry analyst Jeffrey Kagan agreed. "There are a number of stand-alone companies, including Sprint and BellSouth, that they could do a deal with, but there is no indication they are next on Global Crossing's call list," he said.