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Smaller Telecom Firms Look for Market Niche As Giants Merge

Posted on: Sunday, 6 February 2005, 15:00 CST

Feb. 6--STOCKTON -- There are rumblings that communications behemoths Qwest Communications Inc. and Verizon Communications may bid for long-distance giant MCI Inc., in the wake of AT&T Corp.'s sale to regional phone rival SBC Communications Inc.

Further down the telecommunications food chain, Pac-West Telecomm Inc. announced late last year it would sell off its list of business customers -- small- to medium-sized enterprises receiving telephone and data services from the Stockton-based carrier -- to TelePacific Communications of Los Angeles.

Amidst the feeding frenzy, however, very small telecommunications entrepreneurs are also scrapping to survive and even thrive.

Take Integrated Telecom Solutions and Utility Telephone Inc., two closely allied companies whose modest offices stand just a short stroll across Willora Avenue from each other in north Stockton. ITS sells and services telephone systems, networking equipment, security cameras and more, all connected by Utility Telephone's local and long-distance telephone and broadband Internet network.

With about 15 employees and less than $10 million in annual sales between them, the firms look to build their customer base of small- to medium-size businesses. That's the same market that Pac-West is exiting because its executives sought to avoid the expense of employing a large direct-sales force and support organization.

Pac-West, with $30 million in sales in the third quarter of 2004 alone, will instead concentrate on its business of selling access to its extensive network to other competitive telephone carriers and Internet service providers. The change, however, may send a few more customers to ITS and Utility Telephone.

"We think it's a significant opportunity," said Joe Suprenant, ITS sales director. "We have had many people call us since they were notified about Pac-West's exit from the market."

Individualized service and dedicated support is how his enterprise distinguishes itself, he said.

Unlike many vendors that offer various fixed packages of equipment and services -- no substitutions allowed -- Suprenant said he provides each of his customers just what they want.

"Every customer has different needs ... and we find a solution that fits those needs," he said.

In addition, system design, installation and ongoing service are all handled by ITS or Utility Telephone technicians directly.

"Just call us, because we control all the pieces," said Steven Kim, ITS president. "We cannot only put the phone on your desk, but also the line to your house."

That's the kind of experience that Chase Chevrolet had with ITS, said Melanye Satterfield, controller for the Stockton car dealership.

"We think they do a great job," she said.

ITS installed a new telephone system at Chase about 3 years ago and ever since, Satterfield said, "They've been very helpful, very service-oriented.

They're always willing to send someone over, and they're quick to respond."

The dealership had a number of special demands for its telephone system, with needs differing from the parts-and-service department to the car-sales floor.

ITS configured the phone system to meet those needs. ITS also installed a security-camera system and arranged for Chase to get a new security service.

"That was very helpful, to have a one-stop shopping kind of experience," Satterfield said.

Van De Pol Enterprises had a different experience last summer while preparing to move into its new offices -- complete with ITS-installed telephone, network and data systems.

Three days before move-in day, SBC Communications told the petroleum-products distributor that it couldn't immediately provide telephone and high-speed data connections vital to the company's operations, owner Ron Van De Pol recalled.

He knew he couldn't stop the process of the move and called on ITS to help.

"So they spent long, hard hours and got us in," Van De Pol said.

Not only did ITS install a connection to the public-telephone network -- enough to get a few phone lines in operation, anyway -- it also arranged for satellite Internet service and got the necessary equipment installed within the three days.

"We were able to move in and function, and while not what we planned to do and no detriment to ITS, ITS got it done," Van De Pol said.

For ITS and Utility Telephone, the difficulty is attracting attention amid a media market saturated with messages from the telecommunications giants.

"It's a constant struggle to find market share, but it's out there," Suprenant said.

Small independent carriers have been virtually barred from the consumer telephone business by the Federal Communications Commission, said Jason Mills, Utility Telephone's president.

"The latest FCC rules will allow SBC to prevent us from renting the lines into their homes," he said. "There's not going to be any competition by small companies like me on the consumer side."

What is developing is the battle among huge national and multinational corporations from once-disparate telecommunications sectors offering bundles of wired telephone, broadband Internet, cell-phone and video-entertainment services.

"The competition for the consumer dollar is going to be between the telephone company, cable television, satellite television and the cellular telephone companies," Mills said.

"Everybody's shooting for that triple play. It's the ability to surround the customer with services they use."

Utility Telephone and ITS can't begin to play in that market, but can continue to grow on the small- to medium-size business market.

"There's plenty of market opportunity," Mills said.

Still, he expressed frustration at the growing clout of the regional operating Bell companies and increasing consolidation in the industry.

"We had eight major regional telephone companies in 1996," he noted. "We now have four."

And the latest announcements seem to signal that the once-separate long-distance companies are going to be absorbed by those same regional phone giants.

It would all seem to reverse the goal of increased telecommunication competition once promised by the breakup of the original AT&T and more recent federal legislation.

"It's important to keep that big dog in check," Mills warned.

Utility Telephone Inc.

President: Jason Mills

Founded: 1996 (began operations 2001)

Employees: 4

Address: 941 Willora Ave., Stockton, CA 95207

Telephone: (209) 940-1000

Integrated Telecom Solutions

President: Steven Kim

Founded: 1998

Employees: 9

Address: 7277 Pacific Ave., Suite 4, Stockton, CA 95207

Telephone: (209) 952-5955

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Q, VZ, MCIP, T, SBC, PACW,

Source: The Record

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