Sprint to cut its rates

The General Services Administration's Federal Telecommunications Service last week struck a deal with Sprint to decrease its rates on FTS 2000 and save an estimated $86 million over the remainder of the contract.

John Okay, deputy commissioner of FTS, said those savings are in addition to an estimated $600 million obtained through lower prices that resulted from last year's FTS 2000 recompetition between AT&T and Sprint.

FTS commissioner Bob Woods said the agreement almost completely eliminates the price differential between AT&T and Sprint. He said Sprint will drop its rates from 8 cents per minute to 5.9 cents per minute.

Woods said those rates were actually slated to increase to 9.8 cents per minute later this year after the Treasury Department transferred its traffic onto AT&T's network, but instead they will decrease.

Sprint's new pricing will go into effect Oct. 1, Okay said.

Because AT&T's pricing after the recompetition severely undercut Sprint's rates, agencies left on Sprint's portion of the network were frustrated that they continued to pay substantially more for service than their colleagues in other agencies. GSA program officials subsequently threatened to pull all the traffic off Sprint's network if the company did not lower its rates.

Mark Boster, deputy assistant attorney general for IRM at the Justice Department, confirmed last week before the agreement that DOJ users were dissatisfied with the pricing on Sprint's network, saying he looked forward to a deal that would bring prices down.

Okay credited Sprint for willingly coming to the negotiating table rather than attempting to oppose GSA.

"I think we had a cooperative set of negotiations," Okay said. "It's a good demonstration of the relationship between Sprint, its customer agencies and the FTS staff."

Jim Payne, Sprint's assistant vice president for FTS 2000, said his company had been prepared to negotiate a deal even before it was approached by GSA.

"To some extent, this was anticipated," Payne said. "This is not the first time that Sprint has made price reductions in response to changes in the industry and agency demands."

He also said the agreement left the door open for Sprint to add to its network traffic new users who might be attracted to Sprint because the company adds new capabilities to the network.

"We did build into our agreement an incentive for the government to give us more traffic," Payne said. "There are still some exciting areas, such as [electronic data interchange] or e-mail, that may come forward."

Although Sprint's pricing will remain slightly higher than AT&T's, those prices could fall if Sprint adds more traffic to its network, Woods said.