Readers Report
Different Messages from the "Telecom Mess"
I commend Steve Rosenbush and Peter Elstrom for "Lessons from the telecom mess" (Cover Story, Aug. 13). Their analysis of the telecom industry was thought-provoking, but a few of the "lessons" require additional perspective.
First, competition is alive and well. Local phone companies are taking market share from the Bells at a rate twice as fast as long-distance competitors achieved against AT&T after the Execunet decision. The number of competitors in BellSouth's markets has increased to nearly 300 this year. In the business marketplace, competitors serve 24% of the lines in BellSouth's region. Yet competitors have taken only about 5% of the consumer market. This is because of subsidized pricing, which has not been addressed. While consumers and business customers share the same network, competitors focus their efforts on the more lucrative business market, which has no subsidized pricing. The issue isn't whether we need more regulation--we don't. The Telecom Act directs the local Bells to enable local phone companies to compete, and BellSouth has spent almost $2 billion and added 3,000 employees to do that.
Second, broadband deployment in BellSouth is moving at a rapid pace. By the end of 2001, we'll have 600,000 digital subscriber line customers and provide DSL access to 70% of the households in our serving area. In one year, we will have increased our DSL customer base by 180% and our customer access to DSL by 56%. BusinessWeek has provided a well-written and in-depth commentary on our industry. We welcome the debate.
F. Duane Ackerman
Chairman & CEO
BellSouth Corp.
Atlanta
As one who was involved in the beginning of telephone deregulation, I can only say that, for years, the people in the industry told the Federal Communications Commission and Congress what would happen--but to no avail. The regulators and lawmakers were driven by what was politically expedient and would keep them in their jobs or get them reelected.
As airline deregulation has proved, deregulation without subsidies to the high-cost users, such as travelers in rural areas and small towns, will result either in no service or unaffordable rates.
Jim Harpham
Palm Harbor, Fla.
High startup costs, low margins, and market demographics generally don't support a profitable business case for residential local service competition, regardless of legislative intent or regulatory penalties. If the market does not support competition, neither regulatory nor legislative efforts will make it happen. Perhaps Congress would have better served the public by addressing service performance through a Telephone User's Bill of Rights, rather than by trying to mandate competition.
Regarding the article's "open standards" recommendation for the public switched network: Let's not forget that the nationwide public switched network continues to provide the most reliable service to the most subscribers of any product or service sold in the world. Compare that performance to the poor reliability and security of the hacker-friendly Internet before getting too carried away with open standards.
Jim Strozdas
President and CEO
Quality Communications Inc.
Louisville
Room for Improvement in Regulation Fair Disclosure
Securities & Exchange Commission Chairman Harvey L. Pitt said in his confirmation hearings that the underlying premise of Regulation Fair Disclosure (Reg FD) was "unassailable," but he was open to suggestions on how it could be improved ("Don't roll back fair disclosure," Editorials, Aug. 13). He said he would look to organizations such as the National Investor Relations Institute, for input.
NIRI, whose members represent more than 2,700 U.S. publicly held companies, agrees with Chairman Pitt's statement. Our 1996 "Guidelines for Corporate Disclosure" served as a blueprint for Reg FD, in terms of defining the process for achieving fair disclosure. We believe Reg FD can be improved to increase the flow of information in a number of ways, including a better definition of what is "material" information, since selective disclosure of such information is the linchpin for enforcing the rule. The SEC could provide better guidance on what companies can say in one-on-one meetings with analysts and professional investors without violating the rule. All of this can be accomplished without rolling back fair disclosure for all investors.
Louis M. Thompson Jr.
President & CEO
National Investor Relations Institute
Vienna, Va.
The Making of a Blockbuster
After two years on the market, Enbrel has experienced explosive growth-- as the fastest-selling biotechnology product ever launched ("The spoils of success," The Corporation, Aug. 13). While we continue to secure additional near-and long-term supply, Immunex is doing everything possible to help ensure that current patients are able to maintain their therapy, and that more new patients will be able to try this treatment in the future.
Building manufacturing capacity is a critical challenge for most biotechnology companies because an enormous investment of capital (over $400 million) and time (approximately four years) is often required before it is known whether the drug works. No one knew in 1996 that Enbrel would be approved today for a market of 1 million patients.
Peggy Phillips
Chief Operating Officer
Immunex Corp.
Seattle
Silicon Valley Doesn't Rule the High-Tech Roost
The debate in "Rust belts? Try tech belts" (Science & Technology, Aug. 13) is built around contested definitions of a "high-tech" worker. The manufacturing economy that built the Midwest--the same one that has powered the nation's economy since the advent of the locomotive and the assembly line--has always called Detroit home.
As a venture capitalist in the region, I see many members of the next generation of innovators making Detroit their home. Life sciences, microsystems, optical networking, and Internet 2 are among the next-generation technologies coming of age in the Midwest.
Richard Sloan
Birmingham, Mich.
A Strong Brand Keeps the Bear at Bay
I found "The best global brands" (Special Report, Aug. 6) fascinating, because it's the first time I've read anything that accurately discusses the relationship between a company's core values, its brand value, and corporate valuation. Top-flight companies continually reinforce and reinvigorate their brands by extending their core values (and value propositions) across all product, service, and geographical markets in a unified, consistent way. Over time, this brand value supports and enhances the companies' corporate valuations.
Companies that continue to support their brand identity in this down market are surviving with their corporate reputations largely intact. This is equally true in the business-to-business arena as in consumer marketing.
Marc Hausman
Silver Spring, Md.
Want to Fix Nordstrom? Talk to the Shoppers
"Can the Nordstroms find the right style?" (The Corporation, July 30) summarizes, in part, what my wife has been telling me for several years: The company has lost touch with its customer base. When a salesperson responded to an observation my wife made by telling her to write the company a letter--while telling her they had "100 letters on the same subject"--that tells you something.
I also find it appalling that Nordstrom's has yet to establish a companywide computerized inventory-management system, a most basic function.
Marv Gonsior
Fullerton, Calif.
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Copyright 2001 , by The McGraw-Hill Companies Inc. All rights reserved.
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