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Customer Service Key to Small Business Success ; BellSouth Executive Visits Local Center to Emphasize Company's Philosophy

Posted on: Tuesday, 8 February 2005, 18:00 CST

From the doctor's office to the tattoo parlor to the hobby shop, BellSouth recognized a decade ago that its most diverse customer base -- small businesses -- also provided the greatest opportunity for growth.

David Scobey, president of Atlanta-based BellSouth's Small Business Services division, stopped by the company's 45-employee Small Business Center in Knoxville Monday to check in with customers, meet with employees and further emphasize what Scobey said is key to building the loyalty of small businesses: customer service.

The Knoxville center is one of 19 in BellSouth's nine-state territory.

BellSouth's definition of "small business" is based on revenue and typically includes companies with up to 100 employees, Scobey said.

BellSouth, telecommunications provider for the bulk of East Tennessee's business and residential customers, has faced stiff competition in the small business sector from competitors empowered by 1996 deregulation to challenge BellSouth's dominance in local telecommunications markets.

But after five years of declining revenues, Scobey said BellSouth's small business division is beginning to grow again. Small business makes up about 7 percent of BellSouth's total business, with consumer service making up 25 percent and large businesses making up about 10 percent. The rest goes to wholesale services like access to BellSouth's network, Yellow Page sales, wireless (BellSouth owns a stake in Cingular) and other business.

Competition from other telecom providers hasn't been the only drain on small business customers. The Sept. 11 terrorist attacks hit small businesses particularly hard, he said, and they're just beginning to get back in growth mode.

"Our piece of the business is growing and in a pretty tough communications market and that's a pretty significant thing," he said. "I would say over the past 12 months, and I would say practically in the last six months, there seems to be a real rebound in this sector."

The telecommunications market has changed as well, as regulators, regional carriers like BellSouth and competitive start-ups have battled over how to create the best environment for competition even as technology has provided new avenues of communication that no one anticipated a decade ago.

Scobey said BellSouth is working with smaller businesses to deliver high-speed Internet service to their employees and, in some cases, their customers. For example, some customers like auto repair shops want to provide wireless Internet service to their waiting customers. And companies are seeking faster Internet connections to process credit cards or order supplies online.

He said BellSouth is now testing voice over Internet protocol, or VOIP technology, that allows phone service to become just another connection to the Internet. The company is working with Cingular to create new wireless applications that could assist small business customers, he said, and BellSouth is examining other new types of services like virus scanning.

Customer service is particularly key to helping small businesses with limited resources understand how to use these new technologies, he said.

And BellSouth has built a model around customer service, Scobey said, because it's usually not the cheapest service in town, thanks to numerous other local providers seeking to snatch BellSouth customers.

Competition "has made us have to be more focused," he said, "more intense in everything we do. We've focused on service. ... We've got to be good at explaining (our service). We've got to be good at delivering it."

Scobey wouldn't provide insight into BellSouth's plan of action following Monday's announcement that regional telecom SBC plans to acquire long distance giant AT&T for $16 billion.

Scobey said long distance is proving to be a good business for BellSouth, with more than half of the approximately 900,000 small business customers in its territory choosing to buy long distance service from BellSouth. The company was approved by the Federal Communications Commission to enter the long distance market in late 2002.

"I believe consolidation will happen in the industry," he said. But, he added, change in telecom often occurs more slowly than anticipated.

"Change will happen in this industry, but it happens at a more controlled pace," he said.

As for whether BellSouth will vie, as speculated by market watchers, for the purchase of long distance heavyweights Sprint or MCI, Scobey said he would leave that decision to the merger-and- acquisition experts while he stays focused on customer service.

Business writer Larisa Brass may be reached at 865-342-6318.

STOCK WATCH

* BellSouth: BLS on NYSE

* 52-week range: $24.46-$31

* Monday's close: down $0.67 to $26.24

Source: News Sentinel

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