April 1996


Communications By Lisa Corbin

Deregulation creates new competition for post-FTS 2000 contracts.

This year will be remembered as one of great change for the federal phone market and the telecommunications industry in general. In January, President Clinton signed a sweeping telecommunications-reform bill that marks the first major overhaul of the industry since the 1934 Communications Act. The new law allows long-distance carriers, local phone companies and cable-TV operators to invade one another's turf.

The seven Regional Bell Operating companies now will be allowed to manufacture equipment and offer long-distance services, while long-distance carriers will be able to service local exchanges. Cable TV firms can offer local phone service and telephone companies can sell video services. Even gas and electric companies can help build the National Information Infrastructure.

The new law is expected to generate many joint ventures and alliances in the industry. Rumored mergers include AT&T and Time Warner, Bell Atlantic and Nynex, BellSouth and SBC Communications, and Pactel and US West. In preparation for expected changes, companies already are beginning to restructure and consolidate. Two weeks before Congress passed the telecommunications reform bill, AT&T announced it was eliminating 13 percent of its workforce over the next three years.

Though tough on workers at big communications companies, the new law should bring good news to agency telecommunications staffs struggling with lower budgets, fewer workers and growing technological demands. Once the Federal Communications Commission implements more than 80 regulations pertaining to the new law-which will take the better part of a year-government users should begin to see a broader range of services being offered at a lower cost.

Technology such as Integrated Services Digital Network-which enables voice, data and video to be transmitted at high speeds simultaneously over a single digital telephone line-finally will be available throughout the country, instead of just in select areas. And local phone companies will assume a higher profile in federal procurements.

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

FTS 2000. Last September, the General Services Administration merged its local and long-distance telecommunications programs into a new Federal Telecommunications Service. Cuts in overhead have resulted in local phone service costs being reduced by about $4 per line, with a total projected savings of about $25 million for fiscal 1996. Over the next three to four years, GSA hopes to cut local rates from the current charge of $26 per line to $15 per line, thus saving up to $75 million a year.

GSA has been gearing up for the follow-on contracts to FTS 2000, the 10-year, $25-billion program that provides long-distance voice, data and video transmission services to 1.3 million users at 138 agencies. The two FTS 2000 contracts, awarded to AT&T and Sprint, expire in December 1998. Officials want new contracts in place by the middle of 1997 to allow enough time to transfer traffic from the old networks.

The solicitation for bids on the post-FTS 2000 program will be issued in July. GSA plans to award two or three comprehensive contracts for a wide range of long-distance services, plus several contracts for niche services. Technical and management-support contracts also will be included to provide services such as network design, maintenance and billing.

Unlike the FTS 2000 contract, the follow-on program will not carry any mandatory-use provisions and will be available to state and local governments. Each of the indefinite-delivery, indefinite-quantity contracts will run 10 years, with provisions for internal recompetitions during the fourth and seventh years.

DISN. The Defense Department also is using a multiple-contract approach in its nine-year, $7 billion telecommunications program, the Defense Information Systems Network (DISN). The Defense Information Systems Agency has split the program into four sections that could result in as many as 12 awards for global voice, video and data services. Those contracts will be used to build a secure, high-speed network-more than 100 times faster than FTS 2000-that will transmit everything from military intelligence and satellite images to weather data.

DISN will rely on new services such as asynchronous transfer mode (ATM)-a high-speed, high-bandwidth transmission technology that can simultaneously move voice, data and video over the same circuit by breaking information into fixed-length data units, known as cells, and relaying them through the network via a series of switches. Sharing the other half of the technology platform with ATM will be synchronous optical network (SONET) circuits, which will help form broadband wide-area networks.

Wireless. Another avenue soon will open for travelers on the information superhighway when the Federal Wireless Telecommunications Services contract is awarded this summer. The eight-year contract for analog and digital wireless services will cover monthly access fees, air-time and roaming charges. It will include equipment ranging from mobile phones and battery chargers to antennas and external modems. And the contract will include extra features such as voice mail, call waiting and three-way conference calling.

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