From Long Distance Carrier to One-Stop Shop

Cable &amp Wireless sets its sights on the Internet, wireless and local phone service

Gabe Battista, president and chief operating officer of Cable & Wireless Inc., recently discussed his strategy for taking advantage of the changing telecom landscape. Battista was recently named CEO of the Vienna, Va.-based carrier, which provides long distance services to small and medium-sized business customers nationwide. CWI is the American arm of Britain's Cable & Wireless plc, an $8 billion global group of telcos.

WT: 1994 was an auspicious year for Cable & Wireless Inc. You led the entire group in terms of profit growth, which ballooned 46 percent to $61 million, and enjoyed revenues of $672 million, a 10 percent increase over 1993. What drove this performance?

BATTISTA: More than anything else it was a group of people all focused on serving the customer. We deliver services, and there is no question that anything we sell, whether it's voice, data or fax services, there are myriad organizations within this organization that have to operate vis-a-vis each other in order to get the end product to the customer.

It's been a great year. We are blessed with a growing industry, and it's a heck of a lot easier when the pie is getting bigger. And it's so big that the big guys lose focus on some segments, and our idea is to focus and be better than them in this segment. We don't try to sell the marketplace anything we don't think we can be the best in. It's about quality, price, direct sales representation and service. We have to be good with quality, competitive with price, excellent on distribution and a few exclamation points with service.

WT: You were recently named CEO of CWI. What's your vision for the company?

BATTISTA: My vision is that Cable & Wireless will become a seamless member of the federated group of Cable & Wireless companies around the world, where as a group of companies, we take advantage of our breadth and geography and leverage our technological capabilities.

An example of that are seamless services to financial companies. When you think of the financial capitals of the world, Tokyo, Hong Kong, Sydney, London, Stockholm and Frankfurt, we have a lot of them right within the family of Cable & Wireless companies. So we need to keep expanding in other markets in North America, and we need to take advantage of the group's presence and capabilities around the world. We see the marketplace beyond the borders of the U.S.

WT: More than a few carriers have set their sights on cyberspace. Does CWI have any plans to get into the Internet access business as well?

BATTISTA: I think Internet access is important, and it's a necessary condition for content distribution, but we don't see Internet access as an end in itself. Our vision is to provide the access where required and to bring our customers the information they need to run their business.

That's sort of what we've tried to do in the long distance business. We don't just provide a long distance minute, we provide key information for companies to help manage their business, whether it's accounting codes, project codes or whatever. I see the same thing with Internet access. I think it's valuable to us because it lets us give our customers another important piece of a telecom service, albeit it's data, albeit it's via the Internet.

In the long term, you [won't] survive in this business if you are just an access provider. Internet access will continue at an astounding rate, but the business segment will only sustain itself if it includes information valued by companies. So Internet for us is not just Internet access.

WT: You're talking not just transport but the actual provision of content.

BATTISTA: We are talking provision of content, about creating the right software that makes it user-friendly.

WT: Like intelligent agents?

BATTISTA: Absolutely. Our parent is an investor in General Magic. Anything that can take that information, transform it into [something] a lay person can use, with the proper security, with the proper hand-holding, we see as a valuable asset. That's where the play is in the business - not just in access, which is becoming more and more of a commodity. It's content that counts.

WT: Last November, CWI announced a partnership with North American Wireless, a start-up that hopes to organize a nationwide alliance of personal communications services "designated entities." How is the deal progressing?

BATTISTA: North American Wireless is continuing to pursue its funding and pursue its designated entities, and we hope to provide the long distance services to them and other support services such as billing. That is still coming together, but is taking a little bit longer than we thought.

The NAW strategy was to

provide a valuable service to designated entities, and also give them the opportunity to sell us something that we can resell to our customers. We don't believe owning the network is ultimate to success; packaging what the customer wants is. So it's still something that is important to us, because ultimately, we also want the ability to cost-effectively provide wireless services to our customers.

WT: What about the local arena? Does your local/long distance trial with Teleport presage your eventual strategy, reselling local service to your customers?

BATTISTA: Yes. We are providing local service today in New York to some of our customers in an arrangement with Teleport. We are moving forward in lots of areas to see how we can cost-effectively provide local service to our customers and bundle it with our long distance.

Today, the people anxious to do that are the competitive access providers, and we believe that will begin to spread to the Bell operating companies. Look at the Ameritech-Department of Justice proposal. So we are talking to all of them. We're getting mixed responses, but the ultimate push will be in that direction.

WT: It seems like you plan to offer your customers every conceivable telecom service, and then some.

BATTISTA: Five years from now, you won't be able to be in this business without offering customers wireless, local and long distance service, because the rules will change. Right now, customers are forced to deal with different vendors, but as soon as they don't have to, they will all want one vendor to one-stop shop.

That's what we see as paramount to our ultimate success. And we have to figure out how to cost-effectively provide our customers a combination of wireless, local, long distance and data services that they need once the regulations change, whenever that is.

WT: Do you fear the eventual entry of the Baby Bells into long distance?

BATTISTA: I would call myself a person who looks for opportunity. I believe of the 100,000 business customers I have today, I have them in spite of the fact that they have 1,000 [other carriers] to choose from. So if I'm given a competitive chance with effective resale of local services, I think I win.

There are some scenarios

that suggest the other guy comes into the business and takes

those customers away from me. [But] do they have good relationships with their customers?

I'm biased. Maybe I'm naive,

but I think our customers like us and want to stay with us. I'm not sure the new entries into the marketplace have that kind of customer loyalty. Obviously, that's yet to be proven, but we'll find that out real quick. So when they come into the market, if the playing field is equal, I believe I grow a lot more. n


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