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Document 73 of 784.

October 1, 2000, Sunday

SECTION: Business; Ed. Final; Pg. 1G

LENGTH: 1279 words

HEADLINE: PHONE SERVICE OPTIONS OPENING UP
AT&T, OTHER FIRMS GIVING BABY BELLS A TOUGH FIGHT

BYLINE: By Jerd Smith, News Staff Writer

BODY:

Nicole DeHerrera, a Denver mother of four, was spending more than $120 a month for one home phone line and a cellphone.

When an AT&T salesman knocked on her front door recently offering an alternative to her existing phone company, U S West (now Qwest), she decided to try something new and save a little money in the bargain.

"I hesitated at first," said DeHerrera. "But then I decided to switch."

DeHerrera is one of thousands of Coloradans bravely dialing into the new phone world. They leave behind nearly a century of monopoly service to see what it's like to have companies literally knocking at the door to offer new options and potentially better prices. "For the first time in the history of residential phone service, people have a choice . . . and they like it," said Joe Stackhouse, vice president of AT&T Broadband. "They like being able to pick and choose."

AT&T, hardly a scrappy, young phone company, is nevertheless giving old- line Bell operating companies a run for their money. In Denver and nine other cities, AT&T is offering free local phone service until Feb. 1 to lure customers to its new cable television and phone network.

Hundreds of people are calling daily to switch, Stackhouse said, adding that "demand has exceeded our expectations."

Prior to the free promotion, AT&T had signed up more than 27,000 metro area customers to its cable-based phone network.

Until now, local phone competition had been slow to catch on, though long- distance markets have had numerous players for years. In the four years since Congress passed the Telecommunications Act of 1996 - which deregulated local phone service - new players have been slow to enter markets, stymied by lawsuits, slow regulatory action and the complexity of transforming a one- company universe into a booming, multicompany arena.

With many of those problems now solved, companies such as AT&T, McLeodUSA and a handful of others, are racing to get their products in front of Colorado homeowners and small business owners.

Markets are opening quickly.

At the end of last year, 5 percent of Colorado phone lines were controlled by new companies, according to study released last month by the Federal Communications Commission. Nationwide, competing phone companies controlled about 4 percent of the market.

This year those numbers easily could double as new entrants take control of larger portions of the phone market. In Colorado, at least four telephone companies are looking to loosen Qwest's stronghold on local phone customers.

"The small-business market is very competitive, but the consumer market has really heated up in the past six months," said Judi Hand, senior vice president of sales for national markets at Qwest.

In some months, Qwest's churn rate - the pace at which customers leave for new companies - soars into the double digits, Hand said. But its "win back" rate soars as well, she added, because Qwest often waives installation fees and offers free service to customers who return to the fold.

For consumers, the benefits of new competition are becoming clear - more services to chose from and monthly savings of between 5 percent to 10 percent.

"The No. 1 reason people leave is price," Hand said. In response, Qwest and others are lowering prices in some areas and adding new services to thicken the revenue stew.

Qwest, for instance, charges more for a second residential phone line than AT&T does. But Qwest also offers a new package of services that includes two phones lines and such features as caller ID and three-way calling. Customers who buy that package of services, which costs $39.99 a month, get their second phone line for about $7 instead of the normal $14.91.

Under the package plan, Qwest's second phone line is competitive with AT&T's, but customers also wind up paying for services they might not otherwise have purchased.

Other companies are selling similar packages.

Where customers a few years ago simply wanted to get away from their existing phone company, they now "want a choice of new services and cost savings," said Stacey Stewart, a vice president at McLeodUSA.

However, this new phone age isn't easy to navigate. Discontented consumers show up in greater numbers every year. Some are confused by complex packages that make it difficult to compare prices. Others are angry at companies that switch their service without consent.

Phone customers who have left their Bell operating companies are quick to recount horror stories of confusing billing statements and service outages that sometimes last for days.

Consumers need to be careful if they decide to switch carriers, said Barbara Fernandez, a spokeswoman for the Colorado Public Utilities Commission.

"People need to realize we're in a transition period and that they are the pioneers," she said.

Old regional Bells, such as the former U S West, say they are ready for the new era, prepared to shed their monopolistic ways in favor of a supercompetitive stance.

"This is just the beginning," said Qwest's Hand. "We think it will be this competitive from now on because the minute these new companies finish their networks, a new technology is going to displace what they're doing.

"Wireless phones are already displacing the need for second phone lines in a lot of households," she added. "This is just the beginning."

INFOBOX (1)

Coordinating phone switch to new firm

With all of the action in local phone markets these days, regulators, consumer advocates and phone companies say consumers can take a few simple steps to ensure their switch to a new company goes smoothly:

* Make sure your order for new service - particularly your name, address and phone number - are given to the new company in precisely the same way. Even a missing middle initial can confound computers monitoring the conversion and delay the process.

* Allow up to 10 business days to complete a residential phone service transfer of your same phone number, and more time for a small business transfer that involves multiple phone lines.

* Schedule the service transfer during a period when phone service isn't critical. Keep cellphones handy in case something goes awry. New phone companies often switch service at night to minimize the impact of the switch. They also provide cellphones and will forward calls if a glitch puts your new phone out of service. Make sure to ask for these accommodations if they're not offered.

* Once you've scheduled the transfer, keep the appointment. Customers sometime lose service because they fail to show up for the installation - the existing phone company switches the number, but the new company can't install it, resulting in a service interruption.

INFOBOX (2)

Phone competition finally takes off

Though local phone competition has been slow to catch on, it has taken off this year, according to a new report by the Federal Communications Commission. Among the report's findings:

* New phone companies controlled about 4 percent of the national local phone market by the end of 1999. In Colorado, they controlled slightly more - 5 percent.

* New phone companies reported that revenue from local service nearly doubled between 1998 and 1999, reaching $4.5 billion last year, up from $2.4 billion.

* Mobile phones continue to change the way people call and to supplant traditional phone lines. Nationwide, 76 companies offer some mobile phone service to 79.7 million subscribers. In Colorado, 8 companies offered mobile phone service to 1.55 million subscribers at the end of 1999.

NOTES:
Contact Jerd Smith at (303) 892-5474 or smithj@RockyMountainNews.com.
WALL STREET WEST COVER
SEE END OF TEXT FOR INFOBOX (2)

GRAPHIC: Color Photo
Nicole De Herrera sits with her son, Khyle, 4, while AT&T worker Mark Gonzales installs a line at her home Wednesday. By Barry Gutierrez / News Staff Photographer. FILE: ARCHIVE. HARD COPY: GUTIERREZ - SHOOT DATE 2000: 9/27

LOAD-DATE: October 4, 2000

Document 73 of 784.


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