daemon@ucbvax.UUCP (08/15/84)
From @MIT-ML:Telecom-Request@MIT-MC Tue Aug 14 15:23:51 1984
TELECOM Digest Wednesday, 15 Aug 1984 Volume 4 : Issue 66
Today's Topics:
[NYT: ITT 3takes]
Directory Assistance
1+ dialing; Telequest
AT&T intrastate rates
Long distance Directory Assistance
AT&T difficulties
Re: TELECOM Digest V4 #64
[The disk pack (LIB:) which Telecom resides on was down due to a
broken disk drive last week. Any mail addressed to TELECOM or
TELECOM-REQUEST was lost and should be resubmitted to those addresses.
--JSol]
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Date: Mon 2 Jul 84 13:31:11-EDT
From: Clifford Neuman <BCN@MIT-EECS>
Subject: [NYT: ITT 3takes]
NEW YORK -- It will be five years -- on July 11, to be exact -- since
Rand V. Araskog, son of a Fergus Falls, Minn., dairy farmer, took over
the reins of ITT, the telecommunications giant whose electronic wires
span the globe. Araskog had the tough job of succeeding Harold Geneen,
the legendary conglomerate builder who molded ITT into a $21 billion
behemoth. But what Geneen brought together, Araskog has torn asunder,
creating a trimmer, yet still troubled, ITT.
In his tenure as ITT's chairman and chief executive, Araskog has
lopped off more than 65 companies and raised some $1.2 billion in the
process, substantially cut ITT's ballooning debt, and simplified ITT's
unwieldy bureaucracy. For this, he has received high marks. But Wall
Street eagerly awaits Araskog's next act. And, ITT's poor showing in
the stock market is a measure of a widespread belief that not much
else is waiting in the wings.
``This is no time for Araskog to rest on his laurels,'' said Harry
Edelson, a technology analyst with the First Boston Corp. ``He's got
to do something from here on out. It's time for the company to be
reinvigorated. He's sold the cats and dogs. Let's get into the
horses.'' Added Brian R. Fernandez, an analyst with Nomura Securities:
``To get a real spark of renewed investor interest, you need either a
divestiture or operations will have to turn around.''
But ITT is so huge that Araskog's next move will have to be a
stunner to have any impact. He sits at the pinnacle of an empire that
resembles a Hollywood version of the multinational mega-corporation.
ITT is the king of telecommunications overseas and is just beginning
to break into the American market, newly opened to all comers after
the AT&T divestiture. Its insurance and information operations include
the Hartford Insurance Group and the electronic mail system used by
the White House. And it has a grab bag of other diverse businesses
including Rayonier forest products, Sheraton hotels, Scott lawn
products, and the Continental Baking Co., maker of Wonder Bread and
hostess Twinkies.
ITT is a sleek corporate world where Araskog jets to meetings h
Brussels, London, Washington, and New York in a turquoise-and-white
12-passenger Gulfstream III. He meets monthly with his 80 senior
lieutenants in a corporate board room of microphones and maps, a
setting that looks like everyone's fantasy of a Pentagon war room.
Yet behind this facade of high-stakes finance is a company burdened by
problems in many important lines of its business. Araskog refused to
be interviewed for this article, but analysts and others familiar with
his sprawling domain were, for the most part, critical and impatient
with ITT's lumbering progress of late.
The company's much-heralded foray into the wild and woolly
American electronics market has been characterized as tepid, at best.
The strong dollar continues to push down ITT's earnings from abroad,
the source of over half its pre-tax income. Storm-related losses --
some $15 million from one East Coast storm last March alone -- have
battered the Hartford Group, ITT's single biggest income source. And,
many of its businesses are only marginally profitable: Pretax profit
margins in 1983 plunged to 1.3 percent for insurance, were a scant 4.2
percent for hotels, and 4.5 percent for bakery operations, and even
its core telecommunications business returned only 7.8 percent.
All the while, Wall Street continues to clamor for ITT to sell
even more low-performing businesses in order to raise the cash to
further pay down its still-sizable debt and to fund its brighter
prospects. In the 1984 first quarter, ITT's earnings fell to 52 cents
a share, from 92 cents in the previous first quarter. Analysts have
recently been lowering ITT's 1984 earnings estimates to less than the
$4.50 that ITT earned in 1983 on sales of $20.2 billion. ``I've
described ITT to my clients as either a permanent mediocrity or a
turnaround that won't happen,'' said one analyst, who declined to be
named. ``On paper, they seem to have a lot of strengths. But those
strengths don't seem to pay off.''
ITT has made much ado lately about cracking the American
telecommunications market, which accounts for about 40 percent of the
world market. American telecommunications is the promised land for ITT
-- it feels it can parlay its overseas expertise in making telephone
switching equipment and office switchboards onto American soil. But,
to date, ITT has barely gotten its foot in the door. Most of its
domestic sales have been in basic telephones, some five million or 20
percent of the market, in 1983 alone. At the high ticket end of the
market, its products are few -- and dated -- and many analysts say
that ITT hasn't shown much appetite for competitive battles. Instead,
aggressive competitors like Canada's Northern Telecom and Western
Electric have left ITT in the dust in critical product areas.
``ITT is a company that's blown more telecommunications
opportunities in the last 10 years than any other company,'' said
Harry Newton, president of Telecom Library Inc., a telecommunications
research group. ``ITT has faced the same opportunities that hundreds
of newcomers have faced in this industry. But ITT has not had the
resources, or management focus, or attention, or discipline to do
anything.''
The company has done poorly in the $3 billion-a-year market for new
central office switching systems used by phone companies. It spent
over $1 billion to develop its new digital switching product, the
1240, a state-of-the-art entry that has been rolling up sales
overseas. But ITT must still pump millions more into the 1240 to adapt
it for the American market and the product may not even be available
here until 1986. ITT's domestic version, the 1210, is considered the
Cadillac of the industry here, but is so expensive that it has fared
badly in the face of aggressive competition. In the market for PBXs,
automated switchboards critical to the offices of the future, ITT
offers only a single low-end product that must do battle in the most
competitive end of this market, also estimated to be in the $3 billion
range.
``They've not done well in the central office market or in PBXs,
which is the fastest-growing market,'' said William Ambrose, an
analyst with Northern Business Information, a research group. ``They
offer products of old design and they haven't been quick to react.
There going to have to come up with some new products soon or they'll
be in big trouble.''
Many of ITT's woes can be traced to its legacy as a supplier to
governments and not a marketer to end users. ITT's telecommunications
sales overseas have been largely to government agencies. As a result,
ITT is well schooled in the ways of wooing governments, but not in
facing stiff rivals in wide-open markets. And ITT is being forced to
develop these new skills in one of the most turbulent areas of
American business. ``They've never had to position themselves in this
market and they've never had to face this intense competition,'' said
Robert Sullivan, an analyst with Paine Webber. Added Ambrose:
``They've never had to understand what the end user wanted. They had
to understand what the governments wanted and then engineer it to
those standards.''
ITT, however, shrugs off such remarks. ``There's no reason to
believe we won't do well in the American market,'' said M. Cabell
Woodward Jr., chief financial officer of ITT ``We've only been up and
operating here for a short time, but our worldwide telecommunicatons
effort is going well and I would be suprised if we didn't do well
here.'' Woodward pointed to a few recently placed orders -- a $150
million sale to United Telephone of Florida of a 1240 system and sales
of other equipment to four of the seven Bell operating companies -- as
evidence of ITT's success.
ITT is also moving into computers, where it faces many problems as
well. The company has gotten low marks for its highly advertised entry
into personal computers, the ITT XTRA, an IBM-compatible machine that
has been dubbed just another ``me-too'' product in an already crowded
field. Tough competition has already forced ITT to slash prices of the
XTRA by 20 percent -- even before shipping it to stores. ``ITT will
have a battle royal on its hands and there's no telling whether they
will win,'' said Ulric Weil, a technology analyst with Morgan Stanley.
``This is not the best of times to be a new entry and it is still a
fairly hostile environment for IBM-compatible PCs. There are some 50
companies making them and ITT will be going against the likes of AT&T,
Sperry, and IBM. The fact that ITT has had to cut prices already shows
how treacherous these waters are.''
[The article goes on to describe some of ITT's ventures, other than
telecommunications, so I deleted that segment for publication in this
list. --JSol]
------------------------------
Date: 7 Aug 1984 2008-PDT
From: Bob McConaghy <RMCCON at SRI-CSL.ARPA>
Subject: Directory Assistance
Satellite Business Systems is charging 45 cents for two numbers
through their own directory assistance service.
------------------------------
Date: Wed 8 Aug 84 09:45:54-PDT
From: Richard Furuta <Furuta@WASHINGTON.ARPA>
Subject: 1+ dialing; Telequest
I don't know why there's the resistance to dialing 1+ for long
distance calls. It can be a very useful device from the standpoint of
the telephone user. In this area, 1+ dialing is required for all toll
calls. I find it very useful to be reminded that a call is toll when
returning a call from within this area code. It's a real easy rule to
remembe---if you have to dial 1+ you have to expect a toll charge.
Pacific Northwest Bell is offering a new service called "Telequest."
In essence, it looks like they've combined the yellow pages and
directory assistance. You call the number, ask for a category (and
some number of subcategories), and the operator gives you three
business names and addresses in your area. The example they give in
their ad is finding a hotel with restaurant and gym. A bit of a
shocker is the cost ("a mere $1.85 a call" they say in their
advertisement). Also if interest is that they've assigned the service
a 555 prefix number.
--Rick
------------------------------
Date: 8 August 1984 12:56-EDT
From: "Marvin A. Sirbu, Jr." <SIRBU @ MIT-MC>
Subject: AT&T intrastate rates
The fact that intrastate long distance rates are much higher than
interstate rates over the same distance is not the fault of AT&T.
State Public Utility Commissions jack up these rates way above costs
and use the surplus to keep local basic rates low. In the past the
FCC has done the same with interstate rates, but they are moving to
more cost-based pricing. If rates were all based on costs, you could
expect a $25-30/month bill for your basic service, but long distance
rates (interstate) would be about 34% less, and intrastate rates about
50% less. Good for companies which make lots of long distance calls,
but residential customers would be very unhappy.
Marvin Sirbu
------------------------------
Date: Mon, 13 Aug 84 02:30 EST
From: Andrew D. Sigel <sigel%umass-cs.csnet@csnet-relay.arpa>
Subject: Long distance Directory Assistance
Both ATT and MCI offer two free calls per billing period, providing
that you have made long distance calls (I think in the amount of
$10.00 or more is the minimum, but I'm not sure) during said same
period. It is therefore possible to parlay that into 4 free calls per
billing period if you keep track and spread them out, after which MCI
is a nickel cheaper. I expect that the 45/50 cents figure comes not
only from the time of the call (which can last a couple of minutes),
but also to pay for operator time and other related expenses. Whether
it's justified is another question entirely.
------------------------------
Date: Mon, 13 Aug 84 10:01 EST
From: Steven Gutfreund <gutfreund%umass-cs.csnet@csnet-relay.arpa>
Subject: AT&T difficulties
ATT Service has definitely degraded.
1) I signed up for "Reach out America (and slug someone)". They
completely
botched the billing, charging me double (when the should not have
charged
me for installation, and not noting the first free hour.
2) They re-issued a credit card with my name spelled wrong. Think this
is
an easy thing to fix, forget it. NET does the accounting so they
have
the credit card info, But they can't reissue a new card since the
only
way they can change a name is to cancel the old card (and number)
and
re-issue a new one. Ok, so what do I care, the same number is used
by
AT&T on their card, I will use that card. No, that card also has a
Name mis-spelling, and they can't correct it because of NET. This
is
all the more aggravating because my original card and my monthly
billing
appears correctly each month.
3) My sister with PAC Tel Marketing in Silicon Valley tells me that
they
are in a real tizzy out there. The valley has run out of all DDN
service,
can't install any more, and they have been waiting forever for the
packet switching technology to become available.
It seems that all of this is the result of putting all your chips into
the new untested technology, and getting burned by engineers who tell
you they are "almost ready". I used to feel that AT&T was overly
consevative and tortoise-like with their umpteen years of development
and Nteen field test, after looking at how they have been rushing into
half-done projects, I tend to feel they may have to slow down a bit.
Query: why do other smaller companies have it easier at developing new
products (outside of smaller customer base).
- Steven Gutfreund
------------------------------
Date: Wed, 8 Aug 84 04:19:13 pdt
From: sun!gnu@Berkeley (John Gilmore)
Subject: Re: TELECOM Digest V4 #64
A question I haven't seen answered anywhere:
Why does Mother Bell not permit you to dial your own area code when
making a local call? For electronic exchanges it clearly can be
ignored by the software, and it makes it harder to write programs that
know how to dial any phone number. (Of course in 1+ areas it would
have to ignore the 1+ too. Big deal.)
PS: Telecom seems to be back (at least V4 #64) on the Usenet.
Thanks, whoever brought it back...it's been gone for months.
------------------------------
End of TELECOM Digest
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