Royce Holland, chairman and CEO of Allegiance Telecom Inc., recently announced that his company is the first competitive local exchange carrier (CLEC) to make a facilities-based electronic bonding agreement with a Bell company. Editor-in-Chief Paula Bernier grilled Holland, also the chairman of the Association for Local Telecommunications Services (ALTS) and one of the founders of MFS Communications Co., on what that means.X: How did the Allegiance-Bell Atlantic Corp. electronic bonding deal happen?
Holland: When we formed the company two years ago, this was our strategic initiative from the outset. Now in the wake of the [Telecommunications Act of 1996] it was my feeling, at least based on our experience at MFS, that the one thing that was really standing between the Telecom Act and the fully competitive local marketplace it was supposed to bring was the operations support systems (OSSs) and the electronic bonding of the OSS.
Starting with a clean sheet of paper here at Allegiance, we've been able to go out and select best-of-breed back office systems and automate those and synchronize them to eliminate multiple data entries, which causes a tremendous number of problems.
It had also been our goal to find at least one RBOC (regional Bell operating company) that was willing to work with us on achieving electronic bonding. The opportunity actually presented itself to us quite unexpectedly last April when Bell Atlantic and the New York Public Service Commission (PSC) entered their agreement whereby Bell Atlantic would do a number of things to open their local market, including electronic bonding of OSS. In exchange the New York PSC may ultimately support their [Section] 271 application for New York state.
X: What was the role of the New York state PSC in this?
Holland: The agreement Bell Atlantic and the New York PSC entered into last April--it was a 30-to-40-page document. This agreement covers a lot of ground, specific business procedures for collation, measurement of various metrics and all that type of thing. But the thing that has the highest degree of difficulty is the electronic bonding operations support systems.
The FCC (Federal Communications Commission) did impose these conditions on Bell Atlantic as a condition of the NYNEX [Corp.] merger. But, No. 2, it was actually negotiated between the commission and Bell Atlantic and actually had some Department of Justice input, too, as a program for Bell Atlantic to file a [Section] 271 application at the FCC with the New York commission's approval.
X: Are you still thinking Bell Atlantic will get Section 271 approval in New York by April?
Holland: Things have dragged on enough with the KPMG [International] testing that my feeling on the timing now is probably early third quarter. Maybe June, but probably more like July.
X: Once a Bell gets long distance entry, what is its incentive to continue operating in good faith--i.e., keeping its network and services open and available to competitors?
Holland: What they have in New York state, part of that 30-page document, is an anti-backsliding provision. I think the New York commission did a very good job with developing those anti-backsliding provisions with penalties associated with it. And the Texas commission has done a similar thing.
X: The incumbent local exchange carrier (ILEC) mergers--Bell Atlantic [Corp.] with GTE [Corp.], SBC [Communications Inc.] with SNET (Southern New England Telecommunications Corp.) and Ameritech [Corp.]--seem to be a threat to all other carriers including CLECs. But don't these mergers also give CLECs another tool to open ILEC networks to them?
Holland: You bet they do. We've seen lots of improvement in Southwestern Bell since the Ameritech deal was announced. They are actually working very hard to make it happen as far as switching customers from their network to ours, putting a lot of resources on it far more than they used to have. GTE has probably been right there with US WEST [Inc.] as far as the most difficult ILECs to deal with. Of course, GTE hasn't had a carrot, because they're already in long distance. But the Bell Atlantic-GTE merger should allow us to get GTE on the train, too, with electronic bonding. So we see that as another opportunity.
