FTS 2001 transition presents telecom upgrade opportunities

The government’s move from decade-old FTS 2000 long-distance contracts to a new
set of nonmandatory contracts will give agencies a chance to upgrade their
telecommunications systems and still have enough money for new services, said Sandra
Bates, deputy commissioner of the General Services Administration’s Federal
Technology Service.

But vendors will have to move fast because the money for upgrades won’t last, said
FTS Commissioner Dennis J. Fischer. None of the proposals for using the federal budget
surplus would put any money into governmental infrastructure, he said.

“If you want to use the FTS 2001 transition as a sales catalyst, you must move
immediately,” said analyst Warren Suss, of Warren H. Suss Associates of Jenkintown,
Pa., speaking at last month’s Federal Telecommunications Conference sponsored by
Telestrategies Inc. of McLean, Va.

“Once an agency has gone through the pain of transition, it may yearn for a period
of technological stability,” Suss said.

Although FTS 2001 contractors Sprint Corp. and MCI WorldCom Inc. bid sharply lower
prices than under FTS 2000, Suss estimated the new program could be worth up to $1 billion
a year over its eight-year life.

He said vendors other than Sprint and MCI WorldCom would get a piece of the action by
helping agencies with the complex job of switching their voice and data networking systems
to new providers.

“Any company with a reasonable contract vehicle can help, and the pent-up demand
for agency transition support is enormous,” Suss said.

Bates said the transition will give many agencies an opportunity to change the way they
do business and acquire new systems.

Companies that try to sell telecommunications services outside the FTS 2001 contracts
will have a tough time, Suss said. That strategy is open to AT&T Corp., which has held
more than 70 percent of federal long-distance business under FTS 2000. Suss called it a
high-risk strategy that might have a large payout.

Fischer, however, played down the chances of a large competitor such as AT&T making
significant inroads against FTS 2001 contractors.

“What are the vehicles?” for AT&T, Fischer asked. An agency that chose to
ignore FTS 2001 would have to put out its own telecom contract for competition, even
though transition would have to begin within months. “Agencies face tough
circumstances” if they try to buck FTS 2001, he said.

FTS worked closely with the Interagency Management Council in developing the contract
and promoting its services. FTS’ funding comes solely from reselling services to
federal customers, and it is responsible for the $1.5 billion minimum revenue guarantee
given to Sprint and MCI WorldCom, so it has strong incentives to make the contracts

About the Author

William Jackson is a Maryland-based freelance writer.

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