Name: Donna Cupelo
Age: 43
Background: President and chief executive officer of Bell Atlantic-Rhode Island since March 1997. Vice president and general manager of NYNEX’s central and western Massachusetts business unit from 1995 to 1997. Branch manager for NYNEX Systems Marketing from 1993 to 1995. Director of product marketing for NYNEX from 1991-1993. Various sales management positions from 1978 to 1991.
Education: Masters of Business Administration degree from Babson College in 1982 and bachelor’s degree from Providence College in 1978
Family: Married to William Cupelo with a son, Billy, and daughter, Elizabeth
Residence: Westerly
DONNA CUPELO: ‘I think you are seeing some of the beginnings of that right now.’
PBN: Bell Atlantic spent $83 million to modernize its communications network in Rhode Island in 1999. What sorts of improvements were made?
CUPELO: Well, certainly, like many other companies throughout the nation in the telecommunications arena, we spent monies associated with Y2K compliance. That was done system-wide throughout Bell Atlantic. That aside, we made various upgrades to our existing infrastructure, which includes not only the lines that go from each switching center to various communities and places of business, but also we spent a significant amount of money upgrading the existing structure to handle new technologies connecting the network in Rhode Island. For example, in 1999 we constructed 21 SONET rings, and that stands for synchronous optical network. It’s a fiber optics-based network that provides a very high level of reliability and also redundancy throughout the network here in Rhode Island. An example of some of the money that was used for this modernization program is that we constructed rings not only for private customers, but to the points of presence of some of our competitors such as AT&T, Sprint and MCI Worldcom and several others. Part of that $83 million was also to upgrade software. Rhode Island has had 100 percent digital switching centers for some time now. However, the software abilities have been upgraded to provide new intelligent features to customers, things like Caller ID and other services, such as the ability to trace calls.
You mentioned the Y2K spending. How did the rollover go? Was it a nonevent?
It was a nonevent. We’re happy to say that with all of the efforts that Bell Atlantic put in system wide, we had not even a blip. We were here just in case. We had many hundreds of people working to be ready on call. It was truly a nonevent. It was truly another day in the network, which was our intent.
What is the landscape of local phone service competition in Rhode Island from Bell Atlantic’s perspective? Is there true competition now in your view?
There absolutely is. Let me give you some factual information, a sketch of what exists here in the state. We have 25 interconnection agreements, which means we have signed agreements with competitors that allow them to connect their technologies to our network. We have 32 agreements with our competitors to allow them to resell components of our networks. Typically, a competitor will decide if they want to build some of their own technologies and then interconnect to us or whether they don’t feel that’s a good strategy and decide to just resell what Bell Atlantic provides today. We have a substantial amount of agreements with our competitors already in place. In addition, there are what are called collocation agreements, and there are 109 of these agreements in the state. And what that means is that a competitor of ours puts an actual piece of their switching equipment or transmission equipment within our switching center buildings. These 109 arrangements for collocation that we have in our state of Rhode Island provide our competitors with access to 93 percent of the existing 700,000 phone lines that are in service. So, that’s quite a substantial number of lines that are available to competitors if they choose to offer telephone service to customers.
So the competitors are at the point of building out their networks to yours, getting ready to offer local phone service. But we’re not actually seeing competitive residential phone service being offered yet?
Well, if you focus on the residential market, they certainly have the ability to do that, but what we’ve noticed is that most of the competitors are focusing in two areas. One is in the toll market. For example, in August 1997, in-state toll competition started in Rhode Island. Since that time, Bell Atlantic has lost about 20 percent of the market from both residential and business customers. And we’ve seen competition in another area, and that is most of the new entrants are focusing on the business market. An example of that would be the Cox Communications exclusive arrangement (to provide telephone service) with Providence Place mall. That’s a good example of a business strategy that they’re employing in addition to their cable network Internet access. I just ask you to note, though, that if 93 percent of the customers in the state are accessible by our competitors, nobody’s really jumping to the forefront to serve some of our residential customers, particularly in the rural communities. There is a different priority, it seems, at this point. That’s not unusual when you consider the plans that most new market entrants focus on when they’re getting into a new area of their business.
Looking ahead, do you foresee competitors offering local phone service to residences, particularly in the rural areas, in the near future? Or do you expect competitors to avoid those areas as unprofitable or not worth their time?
I think it’s going to take some time. There have been some announcements by some very bona fide new entrants–one is Log On America, which is an Internet service provider today and has struck a deal, per the newspapers, with a switching manufacturer called Nortel. They state that they are looking to provide services to both residences and business customers through the course of the year. In fact, they’ve been advertising quite heavily–full-page ads in both the Providence Journal and Providence Business News–that they are able to offer services to all communities. I think they are serious about it. I think you are also going to see Cox Communications expand. I know they have talked to the regulatory bodies about their forthright intention to expand telephone services to the residential community. Quite frankly, who has the better reach to the residential customer after Bell Atlantic, but Cox? What we see is that by the end of this year you are going to see more packaging of solutions that will include voice, data, video, Internet and even wireless. I think you are seeing some of the beginnings of that right now.
Given your view of Cox’s ability and that of Log On America and others to provide local telephone service here, why haven’t regulators allowed Bell Atlantic to sell long distance in Rhode Island yet?
We’re in the process of undergoing a very comprehensive group of tasks associated with adherence to the checklist items spelled out quite definitively in the Telecommunications Act of 1996. The legislation that was passed basically says you need to open your markets in a fair and balanced way to competition (before being allowed to enter the long-distance market). You need to be able to price your services in such a way that a competitor could interconnect to your network or resell components of your network. Over the past year, what we have been doing in concert with our competitors as well as the Public Utilities Commission is really putting together those parts, which we expect will be completed by the end of 2000. Then upon complying with all the items associated with the checklist and also proving to our regulators that our competitors have access to our operating support systems, which we are very confident of given the comprehensive two-and-a-half-year analysis and upgrade, that we will be ready to roll out long distance service officially in the state of Rhode Island in 2001.
Assuming all that happens on schedule, what are your expectations for Rhode Island in terms of the long distance market? It’s a small state, but obviously you think it’s worth pursuing.
The reason it’s worth pursuing is that the telecommunications market is only as small as your mind can envision it. When you think about Rhode Island-based companies or Rhode Island consumers, each of those consumers call within the state. They call outside the sate. Many of them use the Internet. Many of them communicate not only domestically, but globally based upon the rich culture we now have in the state. So, it’s important for these folks to be able to have a very cost-effective package of both local and long-distance services that not only give the ability to have some significant cost-saving and value-added types of services within in the state, but throughout the country and even the world.
Bell Atlantic obtained regulatory approval in October for some fairly sweeping changes to rates and calling areas in Rhode Island. What are some of the major changes and how will these changes be phased in this year?
The changes that were approved by the Public Utilities Commission involved three distinct but interrelated changes. First was the expansion of local service areas of 12 exchanges. The second was the reclassification of toll calling to the Providence exchange to one-way local calling from 14 exchanges. All that really means is that for all of those 14 exchanges that previously had to dial a toll call to speak to somebody in Providence, it now becomes part of their local calling. The third thing is that we had a very distinct and small view of rate groups. We had 21 different rates groups, and in a state of this size, it just didn’t make sense anymore. Now we’ve consolidated those into six rate groups. The benefit is that there’s no group within the state, residential or business, that got an increase in their rates. Some saw a slight decrease, and many of them just stayed the same. That includes those communities that had Providence added to their local calling area. As far as the timeline goes, what you will see in 2000 is we will have three distinct phases where we will implement these changes. The first stage will be complete June 30. The second phase will be complete Sept. 30, and the last phase will be complete on Dec. 31. That will include all of the changes I mentioned. We were asked to focus on the northern part of the state first based upon some of the input received by legislators and organizations representing the under-served communities. That will be included in the first phase of the implementation.
