Bell Atlantic, GTE combo could aid feds

Although driven by a strategy focused on the commercial market, the proposed $52 billion merger of GTE Corp. with Bell Atlantic Corp. announced last week may bring the benefits of souped-up products and services to federal customers, telecommunications observers said.

Under the terms of the agreement, GTE shareholders will receive 1.22 shares of Bell Atlantic stock for each GTE share they own. The two companies would have combined 1997 revenues of $53 billion.

At one end of the planned merger is Bell Atlantic, a local and wireless phone-service provider with a strong hold on the local phone market in and around the nation's capital. On the other end is GTE, a national company offering myriad services, including local phone service, long-distance service and wireless service as well as systems integration and network management.

Barbara Connor, president of Bell Atlantic Federal Systems, said the company had already been moving in the direction of providing long-distance service. "We hope to be able to offer long distance soon," Connor said. "In the long run, the merger should allow us to better serve all of our customers, especially large ones like the federal government."

A GTE spokesman agreed that the benefits of the merger would extend to federal customers. "The cumulative civilian and military federal experience of these two organizations, once combined, will enable us to deliver unmatched engineering, networking and telecommunications services for local, regional, national and global customers alike," the spokesman said.

John Okay, a former General Services Administration telecommunications official and current senior vice president at Federal Sources Inc., an information technology procurement consulting firm, said the short-term impact of the merger for the federal customer may be insignificant. If Bell Atlantic is to be the surviving entity in the merger, the systems integration niche that GTE has been trying to develop in the federal market may get overshadowed by Bell Atlantic's image— one of primarily a local phone-service provider, Okay said. "The people in GTE who have really been pressing the systems integration role may have a difficult time selling that to federal agencies," he said.

Sharing Capabilities

But Okay said GTE and Bell Atlantic may share technological capabilities that will result in products and services that are superior to the companies' offerings before the merger.

"I think GTE brings a lot of diversity to the merger," said Warren Suss, a Jenkintown, Pa., observer of the federal telecommunications market. Suss said one benefit might be a marriage of the high-speed data network GTE is developing— a network that would be 100 times faster than the Internet— with the telecommunications infrastructure Bell Atlantic already has in place in its established New York-to-Washington territory, a market teaming with federal customers. The marriage could result in an "end-to-end high-bandwidth offering" of voice/video/data communications services that federal customers could acquire, he said.

Connor echoed the notion of synergy for federal customers. "The same benefits of the merger that have already been identified— the ability to offer more choices of local and long distance, voice, wireless, data, Internet and other services— will also apply to the federal government customer," she said. "We will be able to offer a more complete package, coast to coast."

"The things I thought about were the internetworking capabilities. The two combined forces...give another option for the government in terms of where to get [Internet Protocol] services," said April Ramey, director of the Office of Service Delivery at the General Services Administration's Post-FTS 2000 Special Services Center.

Okay said many federal contracts held by GTE and Bell Atlantic will be unaffected by the merger because those contracts may expire before the merger is finalized and before the two companies can begin building on each other's strengths.

-Brad Bass contributed to this article.