SBC: A New Leader for the New Economy
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Holmes Report

SBC: A New Leader for the New Economy

By mid-2000, SBC’s transformation into a premier data communications and e-business provider was largely complete. It was critical to ensure that marketplace perceptions were fully aligned with the dynamic new company SBC had become.

Paul Holmes


As Wall Street’s unprecedented bull market roared into the year 2000, data-savvy Internet players were widely viewed as the heart and soul of the New Economy, while skepticism swelled at the ability of companies born in the Old Economy to deliver data services and solutions on the same playing field as the thriving dot-coms. But as the year wore on, and “www.boom” turned to “www.bust” for a growing number of dot-coms, a new data leader emerged from an unexpected place.  Under the leadership of chairman and CEO Ed Whitacre, SBC Communications – once the smallest of the Regional Bell Operating Companies – had for several years been reinventing itself as a global data powerhouse.  SBC’s mergers with Pacific Telesis, Ameritech and SNET had solidified its position as the No. 1 network access provider.  As the data traffic carried by that network grew at an explosive rate, the company had moved swiftly to reorganize itself around data as its new core business.  And SBC had backed its commitment to data with a huge investment of resources, rocking the industry with its October 1999 announcement of Project Pronto, an aggressive $6 billion initiative to make high-speed broadband service available to 77 million Americans.  SBC’s leadership knew they held all the right cards.  By the end of the year, the rest of the world knew it, too.


By mid-2000, SBC’s transformation into a premier data communications and e-business provider was largely complete.  The company clearly understood the New Economy and the future of the industry, but it was critical to ensure that marketplace perceptions were fully aligned with the dynamic new company SBC had become.  This was particularly important among business customers, which represent the company’s largest revenue source. The most visible evidence of SBC’s data focus is its rapid deployment of Digital Subscriber Line (DSL) service, which enables users to surf the Internet and download graphics, video and audio files at speeds up to 200 times faster than regular dial-up Internet service. But DSL was just a part of SBC’s data story.  Telling the rest of that story – detailing SBC’s technology leadership, as well as its advanced data and e-business services – was the company’s top communications priority in 2000.


Perceptions.  A review of brand reputation research revealed that, while customers viewed SBC as a reliable, customer-focused provider of local telephone service, there was next to no perception of the company as a leader in providing data solutions.

Competitive Analysis.  SBC closely monitored competitors’ deployment, market penetration and communications activities.  Competitive analysis revealed that in California – considered ground zero in the broadband data war – SBC’s DSL availability exceeded cable modem availability by a 2-to-1 margin.  With the debate over which technology would prevail largely centered on availability, the information proved invaluable in changing opinions.

Preference.  An SBC-commissioned survey in major markets by Decision Analysts showed customer preference moving to DSL.  The survey found a combined market share for Los Angeles, San Francisco, Houston, Dallas and San Antonio of 53 percent for DSL vs. 47 percent for cable modems.

Third-Party Research.  Independent surveys and reports were monitored and used to validate SBC’s internal research:

A study by Internet consulting firm Keynote Systems found that SBC’s DSL service outperformed cable modems during peak Internet traffic hours.

A January 2000 McKinsey study found that consumers preferred by a 3-to-1 margin to receive broadband service from their telephone company rather than their cable company

Forecasts by industry observers predicted DSL’s subscriber base would eventually eclipse cable’s.

Awareness. DSL and SBC clearly were gaining momentum and building a leadership position in the broadband market.  The key was to aggressively expand awareness of that leadership.  As SBC moved forward to blanket the media with strategic messages about its data and e-business prowess, media outlets were closely monitored to measure message pull-through.


Position SBC as a premier data and e-business solutions provider.

Convince key influencers that SBC’s superior technology, aggressive deployment schedules and powerful distribution channels positioned it for leadership and success within the data industry.

Establish SBC as the nation’s leading DSL provider.


Maintain a steady continuum of news about SBC’s data developments and partnerships.

Educate reporters and analysts about SBC’s position and strength as a data provider.

Positively influence industry analysts who, in turn, influence SBC’s customers and media.


Build and Leverage a Continuum of News Developments through aggressive media outreach:

Merger and acquisition announcements: SBC’s $4 billion acquisition of e-business leader Sterling Commerce, as well as strategic initiatives with NAS, BellSouth, InfoNet, and Prodigy, enlarged the company’s footprint, nationally and globally, and provided additional strengths and capabilities across a wide spectrum of data and e-business services.

Strategic partnerships: SBC’s partnership with Cisco, for example, expanded its competitive credentials in the fast-growing business-to-business e-commerce marketplace.

New products: Announcements on new products included:

Industry-leading deployments of IP telephony, gigabit Ethernet, Managed WAN Services and OC192;

Some 250 DSL launches into new markets;

A video-on-demand trial with Blockbuster and Enron;

A DSL-equipped PC promotion;

SBC’s approval to begin offering long-distance data and voice services in Texas, which strengthened the company’s ability to capitalize on data transport beyond its traditional service area.

New business strategies: In July 2000, SBC took a giant step forward with the announcement of new and enhanced e-business agreements and offerings that together position the company to provide its customers with a full range of New Economy infrastructure and services, from Web-hosting to e-commerce applications to e-marketplace development and e-business consulting.

Educate the Media:

Trade Shows: By participating in numerous trade shows such as N+I, Telecom Business, RHK’s Networks of Tomorrow and Yankee’s Networked Homed Symposium, SBC proactively positioned itself as a major player in the New-Economy world.

National and local media briefings: SBC executives met with dozens of reporters at key national and local publications such as the New York Times and the San Antonio Express-News to provide in-depth briefings on SBC’s data strategy. Reporters were invited to tour SBC’s research and development center in Austin, Texas as well as data centers, central offices and neighborhood gateways for hands-on experience of the company’s data initiatives.

Influence the Influencers:

Launched an aggressive industry analyst relations program: A dedicated team was formed to focus solely on building and strengthening relationships with key industry analysts.

Cultivated contacts through data announcements: Over the course of the year, the industry analyst team expanded the analyst target list to reflect the company’s new lines of business and formed strategic relationships with leading and widely quoted analysts such as Forrester’s Jeanne Schaaf, Gartner Group’s  Jay Pultz and Yankee’s Berge Avazian. Key analysts were pre-briefed and provided positive perspective for major announcements such as gigabit Ethernet, IP telephony and long-distance approval.

Industry Analyst Conference: All of these efforts culminated in a July industry analyst conference, in which key senior SBC executives presented a comprehensive overview of the company’s transformation into a full-service data provider and broadband leader.  The conference drew 39 analysts from 20 firms, including several of the most influential observers of the telecom industry.


SBC’s data story was featured prominently in a range of major media.  An extensive profile in Fortune called SBC “the most formidable challenger to cable-TV companies in the race to deliver broadband Internet access to the home.”  The, in a World Series analogy, called SBC “the Yankees of the Telco Group.” CIO magazine recognized SBC as one of the Top 100 companies using the Internet, while Network World named SBC one of the top 25 networking companies; the company was one of only three service providers to make the list – and the only former Bell Operating Company.

More than 2,000 stories appeared on SBC’s data-related products, including multiple hits in The Wall Street Journal, USA Today, The New York Times, The Dallas Morning News and San Jose Mercury News.

The appearance of SBC’s data communications messages in major media outlets steadily increased 15 percent from the end of 1999 to the end of 2000 – outpacing the performance of its principal data competitor, AT&T, by nine percent.

Company research found that SBC ranked consistently higher than its other main data competitors (AT&T, WorldCom, Sprint) in such areas as being a source of high quality, reliable data products, and offering a wide range of data communications and Internet services.

SBC’s data efforts also generated six positive industry analyst reports.  Following SBC’s first industry analyst conference, for example, Jay Pultz with Gartner group wrote, “Of the former RBOCs, SBC has made the greatest strides to transform itself into a full-service provider.”

Thanks to its aggressive industry analyst outreach, SBC now receives a minimum of four requests per week from analysts for product and service information and forward-looking forecasts.
SBC’s data revenues skyrocketed 42 percent from 1999 to 2000; SBC now expects data to account for 38 percent of its top-line growth by 2003.

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