Group Long Distance goes local

Although large long-distance carriers such as AT&T have deemed local service resale unprofitable, Group Long Distance Inc. last week said it was willing to take the risk. The carrier, which resells 1-plus and 800-number long-distance in 49 states, has received certification from 35 states to resell local phone service to business and residential customers.

The goal of providing both long-distance and local service is to offer one-stop shopping for business customers, said Peter Russo, chief financial officer for Group Long Distance. The company is considering offering Internet access and paging services, eventually expanding to a full product bundle, he said.

Although the carrier has just begun negotiations with the Bell regional holding companies, Russo said he hopes Group Long Distance can begin local service deployment as early as this fall. The company initially will target small businesses, seeking new customers for the service through telemarketing while promoting it to existing customers through billing inserts.

"The more you bundle to a customer, the more chance you have of keeping that customer," said Russo.

The company plans to market local service to residential users.

Group Long Distance could enter the local market successfully, but it's going to take a lot of work, said Brett Azuma, an analyst with Dataquest. They will be more successful targeting business customers who care more about pricing and service quality than name recognition, a key draw for residential customers, he said. Azuma doesn't believe that service could begin in the fall, however, unless the company has "a small legal army."

Certification is just the beginning-the proof will be in how successful their service is, said Boyd Peterson, an analyst with The Yankee Group. "It's true that customers want bundles. Let's see if doing it this way can be profitable," he said.