Ultimate Teamwork

Just as parents claim they don't have a favorite child, BellSouth Corporation would probably tell you all of its entities are equally important to the company's communications mix. But according to its 1998 Source Book, wireless is one of the company's three focus strategies. (International growth and its southeast footprint are the other two.) Consider that BellSouth's domestic wireless businesses (one of the fastest growing segments of the company) generated 2.6 billion in revenues last year, and you can see why there might be some favoritism.

But being the young, shining star in a huge corporation is not always easy. There is pressure to make sure you operate just as efficiently and cost-effectively as everyone else, according to Mark Feidler, BellSouth Mobility president.

The corporate eye has been something most of the company's wireless businesses have grown into. BellSouth Mobility DCS, which used to be a self-contained unit with its own support staff, restructured and moved support functions into headquarters last year. Even BellSouth Mobility started out as a small cellular operation.

"Now we're a big company with billions of dollars in revenue," Feidler said. "We had to take employees through an evolutionary process ... We had to become more conscious of keeping our costs in line."

Today, all BellSouth wireless units fall under the BellSouth Mobile Systems umbrella with Stan Hamm, BellSouth Mobile Systems group president and BellSouth Cellular president. The main goal of this wireless team is moving its multitechnology networks to the next generation seamlessly and as cost-effectively as possible.

That is not exactly easy when you consider the diverse playing field this team is working on. Ed Reynolds, American Cellular Communications (ACC) and BellSouth Mobility DCS president, is charged with field operations for TDMA and AMPS 800MHz networks, as well as TDMA and GSM 1.9GHz networks respectively. President Mark Feidler oversees BellSouth Mobility and its 800MHz TDMA and AMPS networks. They both rely on a support staff made up of BellSouth Cellular and BellSouth Mobile Systems personnel.

UP FOR THE CHALLENGEDespite separate field operations, Feidler and Reynolds work in tandem on many issues. They have similar goals and share valuable marketing and network information. Although some markets are serviced as a incumbent cellular carriers and others as insurgent PCS carriers, they leverage the learning process across all markets. Reynolds said because the DCS team has to be more creative and forward thinking with marketing, it shares successful strategies with cellular properties. On the other side, DCS properties benefit from the network experience of their elder brethren. Because cellular operations have had time to find the right and wrong ways of network assessment, Reynolds is using them as a guide to find the right approach for its younger PCS networks.

The story of how BellSouth ended up with multitechnology networks goes back to before Feidler and Reynolds were in their current roles. Early on, the company decided that TDMA was the best technology solution for its cellular networks. But the choice for PCS networks was more complicated. The company's key consideration was time to market. With licenses in hand in 1995, it wanted to launch PCS service by mid 1996. At the time, CDMA and GSM were at the forefront of the digital hype. Upbanded TDMA for PCS networks wasn't yet on the radar screen.

"GSM was the clear winner (for PCS networks)," Reynolds said. "GSM was a proven, established technology with millions in service worldwide. It allowed us to execute key principles of our strategy: first to market."

He added that DCS re-evaluated the decision in late 1995 before placing equipment orders and beginning network build-out.

"We went through the whole process again and remade the decision," he said. "Although TDMA would've been the company's second choice, it wasn't going to be available. We confirmed the GSM decision. It met the criteria of first to market and outstanding technology performance, great voice quality and a very robust system."

When the company acquired the rest of its 37 PCS licenses in the D and E blocks in 1997, upbanded TDMA was ready to go, so it split the properties. Three markets closest to its GSM footprint were deployed accordingly; the company deployed the remaining markets with upbanded TDMA because they tied into its existing TDMA footprint.

The result is a multitechnology network that keeps BellSouth Cellular's Keith Radousky, director of engineering, on his toes. Although he said TDMA integrates wonderfully with analog networks, and PCS networks are simple to operate because of their inherent digital efficiencies, he admitted maintaining high quality, multitechnology networks is challenging.

One move in BellSouth's ongoing effort to make operations more efficient was a recent vendor change. The carrier went from four infrastructure vendors to three to gain better economies of scale.

It also is looking toward higher digital penetration for more efficient operations. Both Reynolds and Feidler have set 1999 goals to reach 80% digital penetration on their cellular networks. Once the company breaks 80% penetration, it will reach the next capacity level and begin to realize the true network efficiencies and economical benefit of digital technology.

According to Reynolds, one market already is there, and the rest are close behind. Overall, Radousky said 50% of the company's wireless traffic is digital, and in larger cities that number is up to 70%. According to Feidler, although migrating customers from analog to digital took a lot of work and a lot of time, the effort is starting to pay off. Of its new subscribers, 60% to 80% (depending on market) are activating digital service.

THE NEXT STEPWith digital penetration right on schedule, the issue at hand is how to prepare BellSouth's multitechnology networks for 3G. Feidler and Reynolds have been working closely to make sure the migration is a smooth one for the company and its customers.

"We want an evolutionary path that makes the technology choice irrelevant to customers," Feidler said.

BellSouth is well on that path, thanks to an agreement earlier this year between TDMA's UWCC and the GSM Alliance to develop interworking standards. BellSouth played a key role in getting that agreement passed, and its efforts have not stopped there. For example, the company is participating with the GSM ANSI-136 Interoperability Team (GAIT), which is focusing on converging existing GSM and TDMA services by the second half of 2000.

Recently, BellSouth presented its ideas on EDGE Compact to ETSI. The goal was to convince the European market it should support EDGE Compact. According to Radousky, the presentation was favorably received, and ETSI has added the issue as a work item.

"That's basically the next step to getting it to the standards," Radousky said. "It's not approval, but it's close."

EDGE Compact is an adapted version of the EDGE Classic that carriers and vendors are touting in Europe. The main difference is spectrum. EDGE Classic requires carriers to clear 2.4MHz of spectrum. That was not ideal for U.S. carriers, so BellSouth and other TDMA carriers modified EDGE to be more spectrally efficient. The result was EDGE Compact, which requires carriers to clear only 800kHz spectrum. Although EDGE Compact does not have as much throughput as EDGE Classic, it has other benefits. According to Radousky, EDGE Compact is more granular and offers more growth options. It would allow BellSouth to take smaller, less complex steps to 3G that require less infrastructure and cost less.

Although BellSouth hopes to deploy EDGE Compact on its TDMA networks and skip the interim GPRS step, it has yet to say when it will start that process. Reynolds will only say, "It's too early to tell, and we'll wait and see how the market develops."

According to Radousky, it's mainly a marketing issue. He's waiting to find out when and where the market demand and revenue will come from so that he can prioritize deployment locations and time lines.

"We'll do it when the market demands," he said. "We don't want to do it prematurely or lag behind. We want to hit that sweet spot."

Although things are coming together for its TDMA networks, BellSouth has yet to decide whether it will take a W-CDMA or EDGE approach for its GSM networks. No one from the BellSouth team would venture guesses on when it will make a decision.

"We'll see what makes most sense," Radousky added. "There are a number of questions that have yet to be answered before we make a decision on that."

The carrier also is trying to decide if it should deploy GPRS on its GSM networks or if it should hold out and move straight to 3G EDGE. Although it all comes down to time-to-market issues, from a technical perspective Radousky ideally would like to move all BellSouth networks straight to EDGE.

He is confident that despite the huge support for W-CDMA in Europe, EDGE will be deployed worldwide because it is more cost-effective. While hype surrounded the harmonization between cdma2000 and W-CDMA, EDGE technology moved along without much controversy. He added that EDGE leverages much of the existing platform and has the same channel structure. On the other hand, W-CDMA requires a whole new base station and doesn't leverage what carriers already have deployed.

IN THE HANDSETThe prep for next-generation services is a 2-fold initiative. BellSouth is pushing its interest in future handset development as well.

"Our goal is to have a flexible CPE that is cost-competitive and feature-competitive that solves half the issue for us," Feidler said. "In the not-too-distant future, with the right handset, customers can travel between GSM and TDMA networks and have function transparency. We're pretty confident that's going to happen."

According to Radousky, Bell-South has received verbal commitment from "the big three" manufacturers that all handsets made for EDGE Classic will support EDGE Compact as well. However, it is still unclear what frequency bands vendors will include. Radousky is hoping for all of them, but is preparing for a compromise. In any case, he expects to see the first truly competitive, commercial GSM/TDMA handsets in early 2001.

The carrier also continues to pursue its Quicksilver initiative, which launched in 1995. The idea is to find a software-defined radio for future handsets. Reynolds describes today's multiband, multimode phones as a couple of phones Velcroed together. Today, if you want a phone with TDMA at 850MHz and GSM at 1.9GHz, you get a lot of Velcro, and it's costly and bulky, he said.

"Can't you develop a phone that has a single set of hardware/chipset that software-wise can reconfigure itself and program chips to be whatever it needs at the time?" Reynolds asked.

Quicksilver has investigated several technologies and said there are at least two or three possibilities available. The main problem: Getting vendors to see the light. According to Reynolds, this is a new notion to handset vendors that typically don't work in the software arena. With a lot of education in 1996 and 1997, Reynolds said they now understand but have yet to embrace the concept because it's still so different from their current methods.

"We're suggesting pretty radical changes," Reynolds said.

Although Quicksilver scientists are developing ideas and have generated some interest, Reynolds said a commercial product is still a couple years away.

UNANSWERED QUESTIONSFor all of the hard work and decisions behind BellSouth, there is a long list of unanswered questions ahead.

"We keep asking questions, but we don't know all the answers yet," Radousky said.

Despite the unresolved issues, this carrier is up for the challenge.

"Ultimately we'll be better off when TDMA/GSM merge," Radousky said. "That's a force, a true world phone. I'm optimistic. With every challenge comes positive outcome."

With a bit of optimism and a true team effort, anything is possible.

Integration has become a key corporate strategy for the BellSouth family. That means using its wireless business to cross-promote all of its products and services including Internet access, ADSL, video/broadcast and paging. It is offering bundled services such as Complete Choice, which includes landline and wireless as well as Internet and entertainment offerings. The company also introduced consolidated billing last summer to further enhance the 1-stop-shopping concept.

But the company is taking another leap forward to ultimate integration that provides interoperability so customers get the best product benefits.

"It is no simple feat to take the best attributes of various networks and have them work in an integrated way for customers," said Mark Feidler, BellSouth Mobility president.

One of its efforts includes a completed BellSouth Mobility trial of landline/wireless simultaneous ring in Birmingham, AL, with 400 friendly users. Feidler wouldn't give rollout specifics, only saying it is safe to assume that over the next six to 12 months BellSouth will launch several landline/wireless integrated products. Unified messaging and increased Internet functionality are both possibilities as well.

Feidler added that working out issues between advanced IN and WIN will play a key role in that future.

"We see an integration of the IN layer of both our (landline and wireless) networks being critical to providing customers with seamless integration," he said. "With the development of WIN standards, it'll be easier to bring some of these services to market."BellSouth uses its bundled offerings as a comp etitive position, often touting the fact that it has wireless licenses covering 98% of its landline customer base. But isn't there a conflict in the fight for minutes of use? According to Feidler, there is no sibling rivalry.

"We want to give customers what works best for them, so if someone's needs are best met exclusively by wireless, then we have that. If someone's needs are met exclusively through wireline, then that business meets it," Feidler said. "Most people have needs for both. Today there are advantages and disadvantages to each technology."

BellSouth has a key business objective for 1999. It wants to be a world-class retailer. As vice president of sales, it is Karen Bennett's job to make sure all 300 of BellSouth's retail stores meet this goal.

When evaluating its retail activity, the carrier found that 98% of the people who visit its retail stores are already customers. Each of those customers visits a store an average of three to four times a year. Eighty percent of the time, they are looking not to activate service, but to trade phones, buy accessories, inquire about enhanced services or pay bills. For Bennett, this translates into additional revenue.

"Our efforts are to take advantage of that phenomenon -- to turn repetitive traffic into a profitable line of business," she said. "...We need to standardize our systems, standardize the way merchandise looks and give extreme customer satisfaction."

The key to this transition is in the back office. So for the past nine months, the company has been upgrading and integrating its back-office functions. It has added ATM bill-payment machines at several stores and has started a spec to overhaul its point-of-sale systems, which should be fully implemented in all stores by the end of next summer. BellSouth will take the approach in four phases, beginning with an upgrade to Web-based systems this year. Another initiative is to centralize the reconciliation process. With a centralized function in each state, store managers have two to three more hours a day to spend on the floor with their sales reps and customers.

It has been 10 years since BellSouth climbed into the international arena with its first wireless service launch in Buenos Aires. Since then, BellSouth International has a presence in 13 countries. In 1998 it generated about 10% of BellSouth's overall revenues.

Specifically, the carrier is concentrating its growth efforts on Latin America. The company offers service in nine Latin American countries with more than 4 million customers. In 1998, Latin American operations generated about 3/4 of BellSouth International's 2 billion annual revenues. The carrier also is starting a 3-pronged business plan to grow its current businesses, expand its footprint and expand its line of services.

BellSouth International has had no trouble sustaining growth numbers.

"The opportunities out there are just wonderful," said Kevin Doyle, BellSouth International associate director corporate communications.

Capitalizing on these opportunities is not easy. BellSouth typically sets up partnerships with local companies giving it anywhere from 22% to 100% ownership in its international businesses. Then BellSouth evaluates each market to determine how much of a presence it should have.

"Some markets you may wave the American flag, others you hold a lower profile," Doyle said.

BellSouth looks for an international relationship that gives it the chance to put to use its telecom experience and allows the partner to contribute a local marketing perspective. With more than 8 million international customers, the strategy seems to be working.