It's not your father's telephone operator

In 1987, the federal government turned 20 years of telecommunications policy on its head. For almost that long, the General Services Administration had operated the government’s telephone service, acting as a surrogate Ma Bell. But after federal courts broke up the Bell System in 1984, the federal government adopted a radically different telecom policy.GSA stopped providing telephone service and instead simply managed the telecom contracts from which federal agencies bought their telephone services. GSA issued requests for proposals for the first such contract, FTS 2000, in 1986. The recent 20-year history of federal telecom is a story of changing procurement practices, new technologies and an evolving marketplace. Yet as one telecom expert observed, none of the telecom initiatives of the past 20 years produced a governmentwide integrated services network.So far, the government has not successfully created such an integrated network, said Mike Corrigan, a former GSA official and now a lead consultant at Suss Consulting. The successes he has seen have been at the state level, such as Virginia’s Commonwealth of Virginia Network, “which is a pretty successful integration of voice, data and video,” he said.Anyone who is new to federal telecom has seen a picture that is quite different from the one that existed before the Bell System breakup in 1984, said Warren Suss, president of Suss Consulting. “The government owned and ran its own network using components provided by AT&T,” he said. “GSA had an enormous staff. It basically was a government telephone company.”The FTS 2000 contract was a turning point, said John Okay, a former deputy Federal Technology Service commissioner who is now a consultant. “GSA didn’t change all that much after the breakup of the Bell System until it developed and awarded the FTS 2000 contract.”The Brooks Act of 1965 and its amendments gave GSA considerably more power than it has now. “GSA was in a power position with the backing of this Congressman [Jack] Brooks, a very powerful guy,” Suss said. “GSA had much more leverage than it has today in terms of dictating how the network would be designed and how agencies would use it.”Agencies outside the Defense Department were required to use FTS 2000 whenever possible. GSA has not had that degree of control at any time since, Suss added. GSA gave AT&T 60 percent of the federal government’s telecom business when it awarded the first FTS 2000 contract in 1988. Sprint, which was then a fledgling long-distance provider, won the remaining 40 percent.“Sprint was a dark horse,” Suss said.“There was a belief that AT&T was so strongly entrenched in the federal market that agencies would continue to use AT&T, and not just because of their technology.” GSA’s award to Sprint was a surprise to many, but the fiberoptics technology that Sprint was using had earned it credibility by the time the federal government made the FTS 2000 awards, Suss said.At that time, agencies were looking for alternatives to AT&T’s services. GSA didn’t have the option of continuing to provide network services as it had been, said Corrigan, who served as GSA’s assistant commissioner for telecom services from 1988 to 1994.“It would have been hard to continue because the customers were an unhappy bunch of campers,” Corrigan said. “From their perspective, the quality was going down and the prices were going up. They were paying something like 35 cents a minute for long distance when I got there.”That price was a dime a minute more than many consumers were paying for long distance at home, Corrigan said. He was responsible for local services under FTS, and Don Scott, now a senior vice president at EDS, at one time managed the long-distance side of FTS.The early days of the first FTS contract were difficult because of distrust between the Democratic Congress and the George H.W. Bush administration, Scott said. “The Hill did not trust the Republican leadershipat GSA,” he said. “I think it’s fair to say that. The program, which was a huge, huge program, needed the Hill’s support.”FTS 2000 use was mandatory, and agencies were assigned to AT&T or Sprint for services. “By the time of FTS 2001, agencies were not assigned vendors,” Corrigan said. “They had competition between the vendors.”Scott said he didn’t fight the mandatory-use provisions of FTS 2000.He felt that he had more important issues to worry about, but he was glad GSA dropped those provisions for FTS 2001.“The agencies had more leverage with GSA [without mandatory use], and that was probably not a bad thing,” Scott said. “I was never a huge advocate of mandatory use.” By the time the FTS 2000 contract expired, Sprint had become established as a credible telecom provider and long-distance rates had dropped from 38 cents a minute to less than five cents, Okay said.Another turning point in federal telecom history occurred in the early 1990s, when Sprint won a contract from the Energy Department to help the agency transition to an Asynchronous Transfer Mode (ATM) network because it needed fast data transmission speeds. In 1994, Sprint won the contract to develop the Energy Sciences Network, or ESnet, an ATM network that would connect DOE labs with contractors, other agencies and academic sites. The contract was evidence that AT&T was no longer the primary source of telecom innovation, said James Payne, president of federal telecom at Bechtel. It meant that a field of smaller, lesser-known players was emerging and gaining credibility as telecom innovators.Data has always been part of the telecom mix, but new data service technologies dramatically changed telecom. “Largely, the networks they had [in the 1980s] were point-to-point networks, where you had dedicated lines to connect computer centers,”Corrigan said.“You didn’t have the cloud technology you have today.”“Most of the [data] communication that happened in those days was sending payroll information over the network,” said Jerry Edgerton, group president of Verizon Federal. Edgerton ran the federal business at MCI before MCI and Verizon merged in 2005. MCI, then called WorldCom, did not win a place on the FTS 2000 contract. It had to develop its federal business by offering specialized services that agencies could not purchase from FTS 2000, Edgerton said.But the company’s outsider status did not prevent it from taking part in another major telecom project. In 1991, MCI was awarded the Federal Aviation Administration’s Leased Interfacility National Airspace System Communications System (LINCS) contract to connect all of the FAA’s air traffic control centers.The FAA had historically done its own engineering, but for LINCS, it allowed the vendors to compete and design the network that would become the traffic control system, Corrigan said. “That was when MCIemerged as a big player,” he said. Before that, it had worked as a subcontractor.MCI subsequently won a place on FTS 2001, the next GSA telecom contract.By the time GSA began developing FTS 2001, federal procurement practices had changed. Agencies could no longer be required to use a GSA contract, and the Telecommunications Act of 1996 set new rules for local service competition. Those changes gave rise to competitive local access companies.The FTS 2001 contract, which went to WorldCom MCI and Sprint, squeezed out AT&T.GSA also issued Metropolitan Area Acquisition (MAA) contracts for federal offices to procure local telecom services in their regions.The FTS 2001 award was another blow to AT&T,which just a few years earlier had lost the DOE contract to Sprint, according to industry observers. GSA’s decision meant that the three-quarters of its customers using AT&T would need to migrate to another carrier.But AT&T still maintained a robust federal business by using MAA contracts and a crossover provision that allowed MAA contract holders to do business through FTS 2001.From GSA’s perspective, however, the wider field of providers enabled theagency to expand its service offerings, said John Johnson, assistant commissioner of the Office of Integrated Technology Services in GSA’s Federal Acquisition Service.“We found back then that the model that was most effective was creating a channel to our customers,” he said.“Having more providers allowed us to create more competition.”Another major shift in the way agencies managed their telecom networks occurred when the Navy Department awarded the Navy Marine Corps Intranet contract to EDS in 2000.“It expanded the definition of networkrelated services,”Corrigan said. “There had been this very clear divide between network services and IT services. On NMCI, the Navy was driven by cost. They were taking a look at the cost of running their ashore networks and their afloat networks.”With NMCI, the Navy chose to outsource its operations and give up directcontrol of the network. It developed service-level agreements the contractor had to meet, and EDS based its billing on the number of NMCI users.“They took the whole ball of wax and contracted it out,”Corrigan said. “They basically got themselves out of the business of running their own network.” This year, GSA will award Networx, which will reflect further changes in procurement practices, technology and the marketplace. The mergers of MCI and Verizon,AT&T and SBC, and others have shrunk the universe oftelecom providers.Voice and data services are more intertwined than ever before. The next few years are also likely to bring additional technical developments, such as expanded use of IPv6, the next-generation IP.“With the reduction of players out there, it is more difficult for governmentto generate the intense levels of competition” that exist under FTS 2001, Corrigan said. “No one really knows what the environment’s going to be like.”Other telecom experts say the competitive environment is different today than it was in the 1990s. For example, companies find it harder to differentiate themselves by the quality of their core services, Okay said. They must offer specialized services to set themselves apart from competitors.Whichever carrier a long-distance call goes through makes no difference, Okay said. “It’s going to get to the other end,” he said. “Your agency’s high-speed data network is going to work no matter who wins. That wasn’t completely true in the FTS 2000 era.”The history of GSA’s major telecom contracts, spanning almost 20 years, reflects only partial success, Corrigan said. “They’ve done a great job of driving long-distance phone calls almost to zero,” he said. But none of the contracts awarded so far achieved GSA’s larger objective, he added. “I don’t think they’ve ever re-created what the game plan was, [which was] to create a governmentwide integrated services network. They may do it with Networx, but they certainly didn’t do it with FTS 2001.”Even if Networx succeeds where FTS 2001 failed, the program might well be GSA’s grand telecom finale. “What we are about to accomplish is probably the last of the era of large acquisitions for telecom,” Johnson said. “What we are about to acquire is three to four times larger than what we acquired in FTS 2001. You’re going to get to a point where it’s going to be almost impossible to address that large a market.”Johnson said he plans to be retired from GSA when the time comes to develop another federal telecom contract. But he can imagine the challenges his successors will face. “The next version will be a much different approach,” he said. “It will have to be.”