GTE gobbles up BBN

     Local exchange giant GTE Corp. last week made a bold move to become a 
national soup-to-nuts service provider by shelling out $616 million to buy 
BBN Corp. and another $485 million to acquire a 13,000-mile fiber-optic 
network from Qwest Communications Corp.
     The BBN purchase, if approved by shareholders and the government, 
would bring  BBN Planet, a national Internet service provider, as well as 
BBN's technology research and development group, under the GTE umbrella. 
BBN Planet offers managed Internet, firewall and Web hosting services and 
would give GTE a strong Internet service offering for business customers. 
     BBN customers were generally optimistic about the planned acquisition, 
but some were hesitant.
'One of our key interests is that our ISP keeps up with our growth,' said 
David Bohnett, chairman and CEO at GeoCities, a Santa Monica, Calif.-based 
company that creates communities of interest on the World-Wide Web. 'We 
are enthusiastic about this partnership because it gives BBN access to 
capital to build out its network and meet our growth projections.' 
     GeoCities is also a GTE local telephone customer, so integrated 
billing for local and Internet services will be an administrative help as 
well, he said. But Bohnett is concerned that his business will not have the 
same visibility with the management of the merged companies.
     GeoCities is not alone. Other customers wonder if the corporate 
culture at GTE will affect BBN's business practices.
     'We're used to BBN's small-shop mentality,' said Charlie Hart, vice 
president of technical services and solutions at Massachusetts Financial 
Services Co., a Boston-based mutual funds management company. 'We don't 
want the personal attention we get from BBN to be diluted by GTE.' he said.
     While cultural changes are almost always part of a merger of this 
size, GTE is hopeful customers will see and feel the complementary benefits 
of its new deals, especially its fiber network build-out. 
     GTE's investment in Qwest's fiber network will let GTE extend its 
network to 92 metropolitan areas when it is completed in late 1998.
     GTE also signed an agreement with Cisco Systems, Inc. to beef up the 
overall GTE network infrastructure. In addition, GTE agreed to partner with 
Cisco on bundled hardware and network services.
     In order to support its new national service offerings, GTE said it 
has created a sales force whose mission is to market packages of local, 
long-distance, Internet and wireless services coast to coast.
      'Our intention is to establish GTE as a national full-service 
provider,' said Charles Lee, GTE's chairman and CEO.
     '[GTE] has seen phenomenal growth this past year with moving into new 
markets,' said Eric Paulak, senior analyst at Gartner Group, a Stamford 
Conn.-based consulting firm. 'It's added 1 million new residential 
customers and 100,000 Internet customers this year alone,' he said. 'Now 
it's time for them to move into the business market where there are better 
profits to be made,' Paulak added.
     GTE is still working out details on how it will integrate the BBN, 
Qwest and current GTE networks. But GTE did say it will continue to use 
UUNET Technologies, a BBN rival, to serve residential customers, said Terri 
Compton, GTE's vice president of new business development. The BBN services 
will be more focused on business customers.
     One other agreement that bears watching is one between AT&T and BBN 
Planet. BBN Planet, which many observers thought AT&T would buy, currently 
carries AT&T's WorldNet Internet traffic. But a clause in the AT&T-BBN 
Planet agreement allows AT&T an out in the event of a change in management 
focus at BBN Planet.
      'We can't yet address how the acquisition will affect the duration 
of the contract,' an AT&T spokesperson said.
     Senior Writer Tim Greene contributed to this story.