BellSouth CEO Duane Ackerman Comments on Third Anniversary of Telecommunications Act

Remarks by F. Duane Ackerman
Chairman and Chief Executive Officer
BellSouth Corporation
As prepared for delivery to
Rotary Club
Jackson, Mississippi
February 8, 1999

If you're like most people when you hear "BellSouth" you think "telephone." And of course the telephone remains at the heart of our business. Here in Mississippi BellSouth has almost 1.3 million access lines running into homes and businesses. That 1.3 million is a far cry from the days of the first telephone exchange here in Mississippi. In Vicksburg, on January 10, 1881, the Louisiana Telephone Company began operating with 77 customers.

With the passage of 118 years, and the addition of 1.3 million lines, the telephone obviously remains at the heart of BellSouth's businessùand at the heart of Mississippi's economy. BellSouth's networks will become increasingly important to the people of Mississippi and the state's economy as America moves further into the "digital" or "networked" economy.

I say this because the networked economy is built on information technology, the marriage of computers and communications networks. It drives growth; it creates jobs. Just this past week in the Wall Street Journal, Roger Angell a former governor of the Federal Reserve, voiced optimism about continued economic growth based in large part on information technology. He asserted that information technology coupled with sound money can produce non-inflationary growth.

Here we get to the crux of the matter for BellSouth, our customers and the economy more generally. While the telephone remains at the heart of our business, it has been joined there by other communications devices, the most important being the personal computer.

Business and residential customers increasingly link computers to other computers through networks, the Internet being the most widely recognized one . Naturally then, computers generate an increasing portion of the traffic on our networks.

All this is why we hear about the "networked" economy. So when you hear "BellSouth" it's not just the telephone that should come to mind these days. It's also the computer.

In fact, only about half of the communications traffic on BellSouth's networks is generated from telephone conversations. By around 2008, we expect that voice will amount to only 10 percent of our traffic.

It's not that voice is declining. In fact, it continues to grow, doubling every 12 years. But "data" traffic over the Internetùe-mail, orders from retail businesses and the likeùcontinues to double every 100 to 120 days.

Last year, you and other Americans used the PC to send over 766 billion personal e-mails, more than seven times as many as the number of pieces of first class mail delivered by the U. S. Postal Service. Throw in the e-mails we all send at work and the number reaches a staggering four trillion. These flowed over private business networks, local phone networks like BellSouth's, and the Internet.

Some of you ordered books from amazon.com; shirts from Land's End; airline tickets; you bought personal computers, sound systems, perhaps cars. Some of you might have used a PC on-line to fill out a loan application or do other business with Trustmark, or Bank of Mississippi, or Deposit Guaranty.

And of course businesses all over Mississippi are generating computer communications traffic, whether on their own network or oursùsmall- and mid-sized businesses and big ones, Ingalls Shipbuilding, Halter Marine, Peavey, Jitney Jungle.

This marriage of the computer to communications networks is opening up new opportunities for individuals, for businesses, for communities like Jackson and others around the state. And it's these opportunities I want to talk about today, the opportunities, the forces producing them, the implications for you, whether at home or at work, the implications for Jackson, the implications for public policy.

First, however, I should say right out that the Jackson metro area is a vital communications center. It is in synch with the technical and other forces reshaping the economy. I know because BellSouth is a big part of Jackson's communications capabilities. We feel at home here. We appreciate your businessùat home, at work.

Of course Bernie Ebbers and WorldCom are now recognized around the world as major players in communications. I look forward to seeing him in Washington on May 23 where he's chairing a tribute to Trent Lott to benefit the Trent Lott Leadership Institute. I've pledged to raise some money for that endeavor from the telecommunications industry for the Institute. It will be good for Mississippi, and I'm pleased to have the chance to contribute to it in this way.

I've said the marriage of communications networks and computers is opening up new opportunities here in Mississippi. I want to look at a few examples here and elsewhere, and I'll start with a few items in areas that don't usually come to mind when you think of the "phone" company.

Beginning later this month, BellSouth's advanced technology will mean that patients at hospitals in Collins, Bay Springs and Waynesboro won't have to wait as long for treatment. Their x-rays will be read more quickly, and their doctors will be able to get on with the proper treatment.

Technicians in these three rural hospitals can make x-rays. But there's not a radiologist there to read them. Radiologists at South Central Regional Medical Center in Laurel do that. So a radiologist either has to drive from Laurel to the appropriate hospital. Or they wait for the x-rays to be transmitted from a personal computer over analog phone lines to another personal computer.

In the old days, transmitting these x-rays took 45 minutes. Starting this month, transmission will take seconds.

BellSouth is using high-speed communications technology to link South Central Regional to the hospitals in the three communities and to the homes of South Central's radiologists. Radiologists will be able to read x-rays on their personal computer. Anytime, night or day, waiting for a radiologist won't be a roadblock for patients who in the past have simply had to wait.

At Rush Foundation Hospital in Meridian, radiologists have been able to read x-rays from home for several years.

Think of the potential for rural Mississippiùand for neighborhoods in the inner cityùwhere clinics could draw on staff at major hospitals, not just for reading x-rays alone, but for a growing range of services.

Here's a truly powerful example of what telemedicine can do.

At North Mississippi Medical Center in Tupelo, there aren't any pediatric cardiologists to monitor the heart irregularities of premature babies or full-term babies born with serious problems.

With the medical center we've developed a new service that will allow pediatric cardiologists at LaBonheur Children's Hospital in Memphis to monitor the hearts of such babies at North Mississippi Medical Center in Tupelo. This means these babies don't have to be moved. A move is risky to them and very expensive. And some babies are so weak they simply cannot be moved.

So our joint effort with North Mississippi Medical Center will give these babies a better chance. I understand we're still addressing some Y2K problems, and there are details of insurance reimbursements and other administrative matters to work out. But the technology works. It's a powerful use of a communications network, and we want to deploy it elsewhere around the region.

Education in Mississippi is getting a boost from BellSouth's communications networks. The Mississippi Interactive Video network uses BellSouth facilities to connect 100 schools, kindergarten through high school, and over 50 other college, university and other sites. Among other things, this allows children in rural districts to take courses not offered at their schools.

We at BellSouth are especially pleased with what we are undertaking here with the Jackson Public Schools. It will be a powerful new tool for learning, a powerful new tool for administering the day-to-day operations of the school system. We're linking up 58 schools and eight administrative offices with some of our most advanced network technology.

The foremost aim is improving student achievement. A master teacher in one classroom will be able to teach students in other classrooms around the city. A Spanish teacher at Murrah High, for example, will also be able to teach Spanish to students at Blackburn Middle School, where Spanish isn't taught.

Students will also get experience they need with computers and software. This will complement training already available in computer hardware, software and systems. This training can lead to good jobsùinformation age jobs. Take a look at the help wanted ads in the Sunday Clarion-Ledger. Sunday before last Day-Brite Lighting in Tupelo was advertising for a programmer/analyst.

Jitney-Jungle was also advertising for programmers and analysts.

Anderson-Tulley in Memphis, Delta State University and others were advertising for various information technology positions. Other unnamed companies were looking for managers of information systems, various programmers and other such positions. These jobs surround various kinds of computer or data networks, whether linked together in a single building or in locations around the world.

These ads are also a measure of the increasing importance of information technology to America's economy.

There are an estimated 300k computer-computer networking jobs available in USA. Networks, networks, networksùthey bring out the full powers of computers.

The pace at which computers are networked together has been speeding up since the personal computer was first introduced. Now, the Internet is speeding it up. What's happening with the Internet is that, suddenly, small- and mid-size businesses and other institutions can now afford network technologies that in the past only big companies could afford. So more businesses are using the Internet to link up all of their locations. If they've only got one location, they're using it to link up electronically with suppliers, vendors, distributors and some customers. Even the biggest companies are turning to it in some aspects of their business.

And with its new network, the Jackson Public Schools can do a better job of preparing youngsters for this new economy. This is a visionary move on the part of the Jackson Public Schools. Ultimately, it will open up more opportunity for youngsters, for the businesses that hire them and for Jackson. Consider it a step toward the workforce necessary in the networked economyùa step that can be a model for other institutions, including businesses. Jackson businesses are going to find more skilled youngsters that can do information age work.

I think it is appropriate today to recognize the moving force behind this new network., and that moving force is the superintendent of Jackson Public Schools, Dr. Jayne Sargent. She's here. Why don't we give her a round of applause. Today's information technology offers incredible promise in education, in health care, in business. Not the kind of thing you usually think of when you think of the phone company. But our networks are making it possible.

That brings me to the Telecom Act of 1996. Here we've talked about all these powerful new toolsùin health care, in education, in business. Yet listening to the debate on the Telecom Act, you hardly ever hear about these. You'd never know the Act had anything to do with telemedicine or distance learning. You might well assume that the only thing at stake in this debate is local "voice" service.

Listening to the debate on the Telecom Act, you'd never know the Internet was around. In fact, the Internet, perhaps the most important development in communications since the development of the phone itself, isn't dealt with in any depth in the Telecom Act. It is mentioned twice, and then only parenthetically. So it's understandable that the debate proceeds as though the Internet is an entirely separate issue.

But it's not. For the way the Telecom Act is implemented will determine how quickly new technologies will be deployed to consumers and small businesses; how quickly businesses and software companies develop more of the powerful, practical applications that consumers will use. That's because our networks are often your link to the Internet. In fact, parts of our networks are the Internet.

Since today is the third anniversary of the Telecom Act, you've likely been hearing all manner of laments about the Act's failure. Clearly, it has not delivered the competition some said it would in local, residential service. It has delivered competition in businessùfor larger businesses and other large institutions, especially in urban areas.

Lots of competitors are offering local service for these enterprises. They offer local service with a full package of services. MCI WorldCom is offering local and other services to businesses in 100 cities across America.

And it is prudent business for communications companies to go after business customers first. Every company has limited capital; they want to put it where they'll get their best return. There are much bigger volumes and higher margins in business markets.

So we don't blame any company for serving business customers. What we don't like is people claiming it is our fault that there is not local competition.

About 1000 CLECs have petitioned to provide service in this region û 750 have been approved û 160 are in business. There are economic incentives for us to enter long distance. Likewise there are economic incentives for long distance carriers to keep us out. We are required to open our network û and we have.

Its been 3 years since that act was past. Around the region we have lost 758k lines û we processed 80k orders from our competitors in January û we have spent or pledged to spend $750M in the opening of our networks.

We've done our part.

And now we want to get on with delivering what our customers asking for. We want to get on with deploying the advanced technology that can handle the increasing traffic on the Internet.

And I must say, current rules complicate the deployment of technology. In the example of the North Mississippi Medical Centerùwhere pediatric cardiologists in Memphis can monitor the hearts irregularities of babies in Tupeloùwe create the connection at both ends. But we have to hand off the traffic to a long distance company in the middle. This increases the cost. It make the technical process more unwieldy. We'd like to compete for the whole job. It would be better for our customer if we could.

As you can see in this example, long distance is often an essential part of delivering the "data" services our customers are demanding. Remember what data is. "Data" sounds cold. But I'll remind you that a baby's heart beat can be data, the x-rays transmitted from Collins to South Central Regional in Laurel are data, so are the high school courses offered by distance learning. So is your order to amazon.com.

You should be proud that the Mississippi Public Service Commission recognizes the larger stakes in the Telecom Debateùwhat is at stake for the further growth of the local economy, what is at stake for the opening up of new opportunities.

The commission has approved our petition for entry into long distance.

We believe it is recognition of this new age in communications, and a desire to see that the people and businesses of Mississippi enjoy the benefits of this new age sooner rather than later.

We are in a new era of communications.

Alan Greenspan, who is not given to overstatement, talks about how this technology is creating a new kind of economy in America (USA). According to Greenspan it is a major force in the current long boom on this business cycle.

It is opening up new opportunities across the boardùfor business, for schools, for hospitals, for individuals not only in the USA at large but at home.

We can't let the current regulatory approach in Washington slow down the delivery of advanced services to consumers and to small- and mid-size businesses here at home.

That would be an approach suited to the day when only the telephone was the heart and soul of communications. But now networks and the PC are also at the heart and soul of communications.

The Mississippi Public Service Commission recognizes that. Frankly we'd like to see their enlightened view become a larger part of the debate on the Telecom Act.

Thank you

Click here to find the latest on BellSouth Application to FCC to Offer Long-Distance Service in Georgia and Louisiana.

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