Winstar Plots Richer Future Via MAAs

Winstar Plots Richer Future Via MAAs<@VM>Winstar Communications Inc.<@VM>Winstar's MAA Awards

Jack Conroy

By Jennifer Freer, Staff Writer

Winstar Communications Inc., having burst into the government arena by winning eight of 13 Metropolitan Area Acquisition contracts, is planning to use the billion-dollar plus deals as a springboard for grabbing more business in the federal, state and local government arena, company officials said.

With the MAA contract wins, the New York-based broadband service provider will see its government revenue jumping from $500,000 in 1999 to more than $1 billion over the next several years. But officials say the company is not going to stop here.

"These wins establish a line of business that makes us a viable entity," said Jack Conroy, vice president of programs for Winstar's Government Solutions of McLean, Va. "We wanted to make sure we were ready and our technology was ready to go after the government."

Under the MAA multiyear program, which is managed by the General Services Administration's Federal Technology Service, Winstar will provide all local telecommunications needs to federal agencies in each city, including voice, switched data and dedicated transmission service offerings. The contract also allows for the addition of new services as they become available.

To date, Winstar has won outright the MAA awards in Baltimore and Cincinnati, and shares the awards in Atlanta, Indianapolis, Los Angeles, Miami, Minneapolis-St. Paul and St. Louis with other top telecommunications companies. (See chart) None of the contracts have begun yet, but Winstar expects to have Baltimore, Cincinnati and Los Angeles up and running this summer.

The work will be performed by Winstar Government Solutions LLC, a wholly owned subsidiary of Winstar Communications formed in 1998. It has 40 employees.

Along with its recent contract wins, the company also intends to bid on seven additional cities that will be awarded MAAs in the next few months: Albuquerque, N.M.; Boise, Idaho; Boston; Dallas; Denver; New Orleans; and Philadelphia.

The MAAs are an opportunity for Winstar to gain other government business by extending the contracts, offering additional services that are not a part of the deals and marketing to more customers, said Riyad Said, managing director and senior analyst of Friedman Billings Ramsey & Co. Inc., an investment banking firm in Arlington, Va.

Winstar's surprisingly strong showing has been a wake-up call for the local telephone companies, known as Regional Bell Operating Companies, which were expected to win some of the MAA contracts, said Warren Suss, president of Warren H. Suss Associates, a market research firm in Jenkintown, Pa., that specializes in telecommunications.

"We'll see if the Bells are going to work to maintain market share, or drag their heels," Suss said. Bell Atlantic officials and the GSA would not comment on Winstar's wins.

Like Said, Suss said he believes Winstar can use the MAA contracts to grab additional government business.

"The government market has been an arena where newcomers have been able to succeed in capturing a share of the market, and even dominating," he said. "The MAA program provides a path to other parts of the market and can expand into more opportunities."

Winstar's Conroy also said the company wants to make inroads in the local government markets where it has won MAA contracts. The company, in fact, is working with three state governments, but he would not disclose the details of the work.

Winstar is pursuing the $10 billion Navy/Marine Corps Intranet contract as part of Computer Science Corp.'s team. Under the proposed contract, the Navy and Marine Corps will outsource voice, video and data networking, desktop computers, hardware, software, services and training for more than 400,000 computer users.

The company also is considering becoming a bidder in the Federal Aviation Administration's Telecom Infrastructure contract, which is worth $2 billion over 10 years, to integrate and manage the FAA's telecommunications networks.

Winstar is a subcontractor to Lucent Technologies Inc. on the Navy's $3 billion Voice Video and Data Communications contract. Under this contract, also awarded in 1997 to General Dynamics Corp., the companies provide the Navy with telecommunications switching equipment and services.

The company also is a subcontractor on the FAA's Leased Interfacility National Airspace Communications System contract that was awarded to WorldCom Inc. in 1992. WorldCom will provide communication lines, other equipment and services for the contract that supports air traffic control communications.

As Winstar expands its services to government agencies, the company plans to offer high-speed Internet, data transfer, Web hosting, application service provider services, asynchronous transfer mode services, frame relay and local and long distance telecom services, company officials said.

Winstar technology is different than most of its competitors, and this helped it to win the MAA contracts, said Conroy. The main difference is that the last leg of Winstar's transmission is through the air, rather than fiber-optic cable, Conroy said.

The company has more than 16,000 miles of fiber network. It buys the fiber in a specific market and constructs it when necessary, and sets up a hub on top of the tallest and centrally located buildings. It then places fixed wireless radios on top of the buildings. This makes the last mile of the network ? the part of the network that goes from Winstar to the customer ? wireless and less expensive.

"Faster, cheaper, better" is Winstar's motto, Conroy said, meaning that it doesn't have to dig up the street, outline environmental plans or get permits to do its work. "It's quicker than developing infrastructure," he said.

Winstar Communications Inc.
Business: Founded in 1993, Winstar is a global broadband services provider focused on high-speed Internet and data service, Web-based applications, Web hosting and local and long distance telecommunications services in more than 60 markets.

Headquarters: New York

Chairman and CEO: William Rouhana Jr.

Employees: 4,000

1999 Revenue: $446 million

1998 Revenue: $244 million

Ticker: WCII on Nasdaq

Winstar's MAA Awards

ValuePartners in Multiple Awards
Awarded March 23
Worth $100 millionNo other awardees
Los Angeles
Awarded March 24
Worth $200 millionPacific Bell Corp.
Awarded March 28
Worth $320 millionNo other awardees
Awarded April 26
Worth $520 millionBell South Corp.
Awarded April 26
Worth $140 millionBell South Corp.
Awarded April 27
Worth $240 millionSBC Global Services, AT&T Corp.
St. Louis
Awarded April 27
Worth $140 millionSouthwestern Bell Telephone Co.
Minneapolis-St. Paul
Awarded May 31
Worth $60 millionUS West Inc.
Source: General Services Administration

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