AT&T Competitors Score Gains
BELLS are ringing - but in a way that's not adding up to total happiness for once-dominant Ma Bell, the giant American Telephone & Telegraph Company. Though the folks at AT&T are not eager to publicize it, a growing number of those bells are ringing on long-distance phone services provided by AT&T's rivals, particularly MCI Communications Corporation and US Sprint Communications Company.
AT&T still has the bulk of the nation's long-distance phone service, especially in households, as opposed to companies. But the momentum on long-distance service is clearly with MCI and Sprint. Long-distance service for these companies is growing about five times as fast as for AT&T.
Joel Gross, an analyst with Donaldson, Lufkin & Jenrette Securities Corporation, calls AT&T's growth rate ``bad,'' considering that the company currently dominates long-distance service. Indeed, Mr. Gross sees a much-tougher, more intensely competitive industry developing for all the companies involved in the long-distance wars.
An upshot of that situation for United States consumers: Lower, more-competitive prices on long-distance charges. In this sense, Washington's decision to foster phone company competition by breaking up AT&T's monopolistic grip on US phone service back in the early and mid-1980s appears to have been a rousing success.
That didn't quite look like the case at first, experts note. Initially AT&T seemed to be floundering, even while the Baby Bells, the regional telephone companies left with local telephone service, were posting rapid growth and strong stock gains.
In the past year or so, however, AT&T has come back impressively. It's a smaller, leaner company, but one that is regarded as a creative enterprise. The company is spending billions of dollars on modernization programs, while upgrading its marketing. First quarter earnings were up substantially; the stock is up by roughly a third from a year ago.
Still, some experts who deal with telephone/communications companies believe that the US public is not yet aware of precisely how many services, such as in the long-distance area, are available to it because of deregulation. As a result, in many cases they may be paying for services they don't need or paying too much for services they do need.
``The problem is that the public is not used to dealing with a phone company in the same way that it is used to dealing with other consumer companies,'' says Cecilia Brancato, an analyst with Oppenheimer & Co. ``Consumers are getting it better, in terms of lower prices on long-distance service. But other areas may be costing them more, such as paying with cash on a public telephone, rather than using a charge card.''
What is unmistakable, say analysts, is the way competition has altered ``telephone service.''
Lower costs: AT&T has been forced to edge its rates downward, largely because of pressure from MCI and Sprint. AT&T still has the lion's share of the $50 billion long-distance service - about 70 percent of the total, down from 87 percent in 1984, before deregulation. But AT&T's rivals are relentlessly chipping away at that dominance: MCI has about 12 percent of the long-distance business and Sprint about 8 percent. In the mid-1980s the two companies together had about the same amount of the business that Sprint now commands by itself.
Corporate choices: The competition is keenest for the profitable corporate customer. Sears, for example, recently elected to go with a Sprint system; Merrill Lynch opted for an MCI system. The federal government is increasingly diffusing its giant orders among the various phone-company players, rather than just going with AT&T.
Better technology: This has always been a strong suit for AT&T, with its extensive research laboratories. But AT&T's rivals are hardly sitting still. Sprint, for example, has moved rapidly to use of fiber-optic transmission lines for its long-distance service. Fiber optic lines, although far more expensive than copper, can carry a huge volume of transmissions - up to 16,000 calls on a single fiber line, compared to some 24 calls on a conventional copper line.