War Is: GST uses the armed forces to fight for a service niche

For CLECs, facing up to Bell regional holding companies is like being on a battlefield. But one CLEC is fully armed. GST Telecommunications Inc., based in Vancouver, Wash., is building up an arsenal of government contracts that puts the Army, Navy, Air Force and Marines on its side.

"We're one of the first CLECs to unseat a regional Bell," says an excited Heather Sirr, GST's major federal accounts manager. She's referring to one of the company's most recent "coups." The carrier has spent $5 to $6 million on equipment to support about 200 government contracts over the past two years.

Why the government? Why the armed forces? And why didn't anyone think of this before? Until last year, the armed forces used only the Bell services. Then the Air Force began asking CLECs to formally bid on the contracts along with the larger carriers.

CLECs have a pricing advantage. They don't have to pay the same tariffs that RHCs do. "We can usually offer prices that are 10% to 15% below those of the [incumbent] LEC," Sirr says.

GST's first military victory was against GTE. The glory: a five-year, million-dollar contract with the March Air Reserve Base in southern California. The flag was captured in late June, a year after the 38th Engineering and Installation Wing of the U.S. Air Force issued its first requests for service proposals. GTE just couldn't match GST prices, Sirr claims.

Full disclosure: According to the 38th, GTE failed to turn in a proposal on time for the contract. But GST would probably still have been selected because it had lower prices, says a government source.

Under the contract, GST will provide the base with a local access trunk, dedicated point-to-point data services and 10,000 direct inward dial phone numbers. This means all carriers in the community will put calls over GST lines, Sirr says. "We are the carrier of record in the 655 exchange."

The length of the contract gives the company security, she explains. And the fact that it's the government means, "we don't have to worry if they'll have the money."

A more recent military conquest: GST overpowered U S West in July for a $1.3 million contract to provide service on the Kirtland Air Force Base in Albuquerque, N.M. It will provide similar service there with 20,000 DID numbers and will become the carrier of record for two exchanges.

Obviously, these contracts are part of a much bigger strategy to carve out a niche in providing service to government agencies. GST is currently providing service to customers in the Veterans Administration, U.S. Customs, the Coast Guard, the Fish and Wildlife Department, and the Department of Defense.

Tom Nolle, president of CIMI Corp., doesn't think GST could make an entire business of working with the government. But hey, it's a good niche to try.

"Because they get to go through a bidding process, it bypasses some of those psychological barriers between CLECs and RHCs," he says.

The reason to head this direction is simple. "The Department of Defense and the federal government purchase 30% to 35% of all telecommunication services in the United States," Sirr says.

The company first got interested in government contracts more than two years ago when the Navy decided to revamp the long-unused Mare Island Naval base, housed on an island off the coast of California. GST looked for bidders on every utility imaginable, and it jumped into the fight to be the phone service provider.

"We really had to make our case, saying we'd invest heavily in the area and make sure telecommunications service would be available to everyone," Sirr says.

GST won the contract. It spent almost a year helping upgrade the facilities, which had been there "since Abe Lincoln's days," Sirr jokes. But the investment brought jobs back to the island. Now GST is the phone company everyone looks to there.

Sounds like more CLECs should get the military to change allegiances.