Competition and Technologies Transform Market

The federal communications market is in a year of transition, marked by new competition and technologies. The telecommunications reform bill that was signed into law in January marks the first major overhaul of the industry since the 1934 Communications Act. The law deregulates the market, allowing long-distance carriers, local phone companies and cable-TV operators to invade one another's turf.

The seven Regional Bell Operating companies now are allowed to manufacture equipment and offer long-distance services, while long-distance carriers can service local exchanges. Cable TV firms can provide local phone service and telephone companies can sell video services. Even gas and electric companies are allowed to participate in the construction of the National Information Infrastructure.

The law has generated joint ventures and alliances as companies restructure and consolidate. Bell Atlantic and Nynex plan to merge into a $50 billion powerhouse that will be the country's second-largest telephone company. And SBC Communications intends to acquire the Pacific Telesis Group for $16.7 billion.

Telecommunications reform has been welcomed by federal information-technology shops struggling with lower budgets, fewer workers and growing technological demands. Once the Federal Communications Commission and state regulators implement more than 80 rules governing competition, agencies will begin seeing a broader range of services being offered at a lower cost. And they no longer will be forced to deal with a single supplier in a given geographic area.

Baby Bells already are setting up separate units to sell competitive communications services such as frame relay and asynchronous transfer mode. This means that fast digital technology such as Integrated Services Digital Network finally will be available throughout the country, instead of just select areas. In addition, local phone companies are expected to assume higher profiles in federal procurements.

"The new telecommunications law will mean more price competition, especially in the local federal markets," says Robert J. Woods, commissioner of the General Services Administration's new Federal Telecommunications Service. "Federal customers will be offered improved technology and more choices for value-added services such as electronic commerce and e-mail."

GSA is developing strategies to foster competition in local service. The agency has asked regional telecommunications managers to create competitive environments in areas with emerging alternative carriers. One way of doing this would be to segment contracts so that targeted cities could be isolated.

Further competition in the federal communications market will aid construction of the much-touted information superhighway. Although the private sector and local communities will design and build the superhighway, responsibility for guaranteeing fair access and protecting users will fall on the government's shoulders. In its final report, the Clinton Administration's recently disbanded National Information Infrastructure Advisory Council said the government's role will be to safeguard intellectual property rights and ensure the privacy and integrity of data.

These responsibilities will be added to a growing list of communications concerns, such as how to obtain maximum speed and bandwidth for the lowest cost. The following pages provide a glimpse of some of the newest communications technologies and an examination of whether they can live up to their promises.

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