CTO: BellSouth lost 9 COs to Katrina

LAS VEGAS -- Hurricane Katrina destroyed nine BellSouth central offices in the Gulf Coast region, BellSouth's CTO said this week.

The lost COs served 20,000 lines on the Mississippi coast and on the peninsula south of New Orleans, said Bill Smith, BellSouth CTO. BellSouth is deploying digital loop carrier systems to restore service, Smith says.

Reconstructing the COs, however, will depend on whether people repopulate those affected areas.

"The ones that were totally destroyed were typically small offices," Smith says.

BellSouth has 4.7 million lines in the Katrina-affected areas of Alabama, Louisiana and Mississippi.

Eleven other COs are still out of service but in various stages of restoration, Smith says. Two in heavily devastated areas of downtown New Orleans will be restored this month and in mid-November, he says.

BellSouth is sticking to its initial estimates of $400 million to $600 million in costs associated with the most destructive storm in U.S. history, which devastated New Orleans and the Gulf Coast in late August. The carrier expects to take a $100 million charge against earnings in the third quarter to cover costs associated with asset impairment.

In a wide-ranging interview with Network World at the Telecom '05 conference here, Smith said BellSouth has all of the technology assets it requires to compete with the mega-carriers formed from the mergers of SBC and AT&T, and Verizon and MCI. Owing to a recent nationwide MPLS interconnect agreement with Sprint Nextel, Smith says it is not incumbent upon BellSouth to acquire additional facilities in order to compete.

"We believe that we've got the capabilities to compete effectively, particularly with the recent announcement with Sprint," he says. "Prior to that agreement, it was a challenge."

The challenge for SBC and Verizon, Smith notes, is that they are acquiring carriers that have a declining revenue base. Though the services are still profitable, it will be hard, if not impossible, to generate top-line growth.

"I think we can be very competitive because it's new revenue for us, and as long as it's profitable revenue the fact that it's being priced down from what it used to be to what it is now is irrelevant to us," he says. "An incumbent provider has that concern to deal with."

Smith says BellSouth chose Sprint over Qwest, with which it has an existing nationwide wholesale arrangement, because testing demonstrated that BellSouth could extend the same SLAs and service classes it offers regionally for managed VPNs on its nine-state IP backbone end-to-end across the Sprint network.