History in the making

Sometimes we're so caught up in the "big events" that we miss the truly historic ones. In the past month, four separate developments were treated as "industry briefs" or ran "inside the book," even within the industry trade press. Yet these four events will reshape the industry and change the relationship between users and their communication services:

* The vote of MCI's shareholders to agree to the company's acquisition by BT and to offer shares of the new entity, Concert, on the New York Stock Exchange rather than NASDAQ.

* The completion of SBC Communications' acquisition of Pacific Telesis.

* Lucent Technologies' introduction of the Internet Telephony Server SP.

* The introduction of 10-digit local dialing in Maryland.

MCI's identity change is an industry and personal watershed. I met the late Bill McGowan in 1976 during a coalition meeting of AT&T's emerging equipment and service competitors. In discussing congressmen who were wavering on opposing the "Bell bill," fearing financial and electoral reprisal, McGowan stated his solution: "#&!* them if they can't take a joke."

That moment embodied the attitude that fueled an extraordinary success story long before corporate culture was seen as important. Although some of that attitude waned as MCI grew, much of the premium BT paid was for what remains of this amorphous asset. Just as NASDAQ will lose luster when its fifth largest member and "long-time IBM" leaves, so will the U.S. marketplace lose some edge just when the entire sector could use it.

The MCI disappearance is an interesting contrast to SBC Communications' absorption of Pacific Telesis Group. Born of circumstances that were its mother's invention and caught in an environment that left little room or time to forge a truly differentiated identity, the swallowing of Pacific Telesis by SBC is not a trivial event. It is the end of the first Bell company. It is the start of what is likely to become "Bell West." This short-lived company, however, will be viewed as the final key that forcefully helped unlock the Pandora's box of industry restructuring.

Next, there is no minimizing the impact of telephone-to-telephone and fax-to-fax communications via the Internet. The tariff arbitrage market alone that enables this technology, and what is to follow from Lucent and others, is a "sobering prospect." Of immediate concern is not just the migration of international voice and fax traffic to the Internet but the real possibility of a frontal assault on the cash cow of the local telcos: intraLATA toll. Incumbents likely will launch services based on Internet telephony platforms, but then it's a marketing game on a level field, and we all know the track record of incumbents as marketing organizations.

Last but not least is Bell Atlantic's 10-digit dialing. Forced by number exhaustion in the 301 and 410 area codes, Bell Atlantic convinced Maryland regulators to allow it to put in two new overlay codes instead of the usual geographic split. With Bell company long-distance and number portability on the horizon, along with number exhaustion, the entire nation will be moving to 10-digit dialing.

Nobody, particularly the industry, should underestimate the importance of this fact. Bell Atlantic thinks it is prepared for the event, which began on May 1, but that remains to be seen. It has targeted school children with coloring books explaining the change, and a blitz is on with senior citizen organizations. This is more than taking PEnnsylvania 6-5000 out of the phone book; it is making your fingers do the walking down an unfamiliar path-a revolution in behavior of significant proportion.

The good news is that while government is forcing us to dial extra digits, it has refrained from making us pay more for the privilege or forcing us to throw out all our phones to receive future basic services. Broadcasters, on the other hand, got away without paying for spectrum for digital services and persuaded the FCC to force all of us, eventually, to purchase new high-definition TVs.

Of the two industries-telecom and broadcast-it is the former that history ultimately may treat most kindly.