Remember Centrex?

Whatever happened to Centrex phone service? One day it was there, and the next it was gone. Vanished. No trace. Or so it would seem at our local telco.

We recently spoke to our local phone provider about expanding our overall service coverage and found out something truly amazing: Centrex doesn't exist. Our sales rep didn't know it still existed. Even more to the point, the rep had never even HEARD of Centrex.

Is this a case of some garage mechanic posing as a phone company employee? Nope. It this a case of some "not so wry" humor from Ma Bell's progeny? Nope. It is a case of running before you know how to walk.

As the market for voice and data services has exploded, alternative providers have cropped up everywhere. Besides the big ones, like MCI, GTE, Worldcom and Qwest, we also have hundreds of little unknowns known as competitive local exchange carriers (CLECs). An interesting name, CLEC, in that it implies that the traditional LECs were not competitive. And in fact, many of the LECs out there could be better known as N-LECs (non-competitive LECs). It is worth pointing out, however, that not all CLECs are really that competitive, and many LECs have come a long way in becoming more competitive.

Unfortunately, this rush to enhance their competitiveness in the open market has been a tricky exercise at best. In their quest to become more nimble, and offer a wider range of enhanced services, they have often actually diluted the overall quality of their services. For example, many LECs have created new "enhanced data" service groups, and begun hiring large numbers of staffers to answer the phones, take those orders, and put the word out on the street that the LECs too can be competitive.

Unfortunately, they have often grown too fast, and hired staffers with a limited range of knowledge: They understand data or voice, but not both.

That's just not going to cut it when data and voice are increasingly moving onto the same circuits. It leads to split-personality telcos with dual sales and support teams (one for voice and one for data) that don't really know how to put it all together into a single bundled offering.

And that brings me to AT&T and TCI (that would be Tele-Communications, Inc., and not Transcontinental Realty Investors, Inc. whose shares briefly soared due to their usage of the stock symbol TCI -- note: Tele-Communications is listed as TCOMA).

AT&T doesn't know cable. The notion that AT&T will be selling cable services is interesting. But the idea that users will want to put their voice services over CATV wires is even more interesting - and unworkable. Amid the press hoopla surrounding the AT&T/TCI announcement and its presumed synergy, is the notion that the new AT&T will offer bundled services in a single configuration in the near future. Unfortunately, it just won't happen. The best they can do is to offer bundled pricing on their services. [See AT&T buys TCI; Is a BT deal next? - Network World, 6/29/98.]

Why? First, people really don't want to use their cable system for their phone service (CATV goes down too often). Second, most cable systems today are uni-directional - data flows only from the head end to you (just look at the cable Internet services that use CATV for downstream access and phone dial-up for upstream access, then look at how popular that service is...). Third, you can't yet put CATV over telephone wires.

And perhaps most important, it will be a long time before the "new" AT&T staffers move beyond thinking that "cable equals TV clicker" and their TCI counterparts realize there is more to AT&T than "phone equals touch-tone" service. The cost of this "re-education" is likely to be well beyond the $1.5 billion it is estimated to take to upgrade TCI's network to "multi-service" status sometime in the year 2000.

In the meantime, while we are all waiting for the universe to converge on a single multi-service architecture, AT&T will be doing what it does best - making money. In addition to their profits from long-distance services, they will now be getting TCI's profits as well - profits that will be extremely high for a bureaucracy as large as the new AT&T will be.

From an end-user perspective, things probably won't change that much. AT&T will continue to sell stand-alone services that, by and large, tend to work pretty well as stand-alone services. And this will only change when AT&T figures out how to fix that pesky last mile problem (or in the case of cable TV, that pesky curb-to-home problem) and then bundle the services in such a way that we can't afford not to purchase integrated phone/cable/internet from one giant company. Until that time, I'd suggest that most users limit their AT&T discussions to bundled "pricing" and leave the bundled "services" debate alone until next century.