Optical/IP Networks

SBC Goes for the Pork

SBC Communications Inc. (NYSE: SBC) may not be happy with the regulatory environment in the telecom industry, but the company is eager to sell its services to the regulators.

Yesterday, the carrier announced that its operating affiliate, SBC DataComm, has received a US General Services Administration (GSA) contract, which will allow it to compete for $35 billion worth of contracts from hundreds of government agencies (see SBC Offers Services to Government).

The contract, which is part of the GSA Federal Technology Service's Connections program, lasts for three years, with the possibility of five successive one-year renewals.

“This is a big deal for us,” says SBC spokesperson Wes Warnock. “We have access to that pot… of hundreds of federal agencies, [and] it definitely helps our relationship with the federal government and extends our relationship with GSA.”

Industry observers, too, say that this could potentially be a big deal for SBC and other regional Bells, which until now have been no match for competitive players like AT&T Corp. (NYSE: T), Sprint Corp. (NYSE: FON), and even WorldCom Inc. (OTC: WCOEQ) in landing lucrative government contracts.

“It will be interesting to see over time what the government does with regard to the WorldComs of the world and the rest of them,” says Craig Johnson, an independent analyst based in Portland, Ore. “Going with an RBOC… is a smarter thing for the government to do, if that’s not an oxymoron.”

“There’s no reason why there shouldn’t be more competition for government business,” agrees Network Conceptions LLC analyst Farooq Hussain. “It’s good for the companies, and it's good for the government… It’s really important for that market space to get the bigger players in.”

While 16 other companies have also been awarded the contract, and will be in the running for the individual government accounts, SBC is one of only six companies that have been authorized to compete in all three service categories: equipment services, support services, and solutions. The other companies on the GSA shortlist are AT&T, Centech, EPS, Internet Security Systems Inc. (Nasdaq: ISSX), and Verizon Communications Inc. (NYSE: VZ).

SBC boasts that it's now positioned to provide services to a number of government agencies and entities with a long range of telecom products and services, including voice, data, and video, along with e-business and support services. SBC Datacomm provides standardized national Asynchronous Transfer Mode (ATM), Frame Relay, and private-line transport services, as well as optical, Ethernet, IP VPN, and managed Web hosting services.

“This is definitely good for SBC,” Hussain says, but cautions that having the possibility to compete for the government business doesn’t mean the company’s going to get any of it. “They haven’t landed themselves in some cushy compartment where they can get a regular paycheck each month.”

— Eugénie Larson, Reporter, Light Reading

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