NYNEX Signs First-Of-Its-Kind Agreement With Long Distance Vendor - Describes Long Distance Strategy
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April 24, 1996
NYNEX CONTACT: Media Relations,
NYNEX Signs First-Of-Its-Kind Agreement With Long Distance Vendor - Describes Long
NEW YORK, N.Y. -- NYNEX (NYSE:NYN) today announced it has
signed a unique agreement with Sprint Communications Company, L.P. that will
enable NYNEX to quickly enter long distance markets, including the $10 billion
market in its own home region.
The agreement is part of NYNEX's plan to
rapidly provide a full array of long distance services to customers throughout
its Northeast service area as well as in select domestic and international
markets outside its region.
Under the terms of the two-year contract, NYNEX
will purchase a comprehensive set of network, customer care, billing and
telemarketing services and use these to sell domestic and international long
distance services. The contract also gives NYNEX the flexibility to develop and
package with its long distance service a broad array of other value-added
"Our agreement with Sprint is more comprehensive and
flexible than conventional long distance resale agreements, and it allows us to
enter the market with world-class capabilities and world-wide
reach," said Robert T. Anderson, NYNEX vice president - Business
Development, who is also president of NYNEX's long distance subsidiary.
"By using Sprint's infrastructure, we'll enter the market as a lean and
efficient operation," Anderson said. "Furthermore, the agreement
provides a cost structure that will enable us to have the pricing flexibility
required to be competitive in the long distance market."
importance, the contract spells out a specific set of service standards and
ensures that NYNEX will be in a position to provide the best value and service
offered in the market. NYNEX also has at its discretion the option to take over
portions of the customer care and network functions provided by Sprint.
NYNEX and Bell Atlantic, which yesterday announced a definitive agreement to
merge, are pursuing parallel plans for entry into long distance. For its part,
NYNEX is taking a three-pronged approach
to the market: targeted "out-of-region," international, and
Targeted "Out-of-Region" Markets Will
NYNEX is well positioned to succeed in the long distance business because
of market advantages unique to its six-state service area, particularly the
high volume of international long distance traffic as well as the affinities
that certain groups of callers from outside the region have with the Northeast.
"Millions of people worldwide, such as 'snowbirds' or many national or
multinational businesses, have a personal or business relationship with someone
in the NYNEX region, which provides us with a unique competitive
opportunity," Anderson said. "Our opening strategy is to quickly take
advantage of this fact."
NYNEX expects to offer long distance service
within the next three
months, pending regulatory approvals, in six states: Arizona, California,
Florida, Georgia, Illinois, and Texas. These states account for more than one
third of all domestic long distance traffic terminating in the Northeast.
"We will use a targeted marketing program rather than mass marketing to
reach out-of-region customers, and we will offer them value-added packages of
products and services based on the high volume of their communications into the
region," said Anderson.
"This marketing strategy focuses on
selected high-margin segments, not overall market share," he said.
"Combined with our use of the Sprint infrastructure, this marketing
strategy will allow rapid entry with minimal investment and low operating costs
-- which will enable NYNEX to maximize the contribution to earnings from
International Call Volumes are NYNEX's
On Feb. 23, NYNEX became the first Regional Bell Operating
Company (RBOC) to file to provide international long distance service,
which has the most rapid growth and the highest margins in the long distance
market. More than 20 percent of U.S. international calling originates in the
NYNEX region, representing an opportunity of approximately $3.0 billion a year.
The NYNEX territory is a magnet for international business and travel.
"Nearly one-third of New York City's residents were born in other
countries, and our region shares a long border with the most populated
provinces of Canada," said Anderson. "We can help people maintain
their personal and business ties between the northeastern United States and
their home countries."
NYNEX expects to begin providing
"out-of-region" international service this summer, and will offer
international service to customers within its region when it receives the
Early Entry into the "In-Region"
The Telecommunications Act of 1996 requires RBOCs to meet a
"checklist" of items that open their local networks and markets to
before being permitted to offer long distance service to customers in their
"NYNEX is already ahead of other RBOCs in meeting the
'checklist' requirements because of the progressive steps we have taken to
foster competition," Anderson said. He said that NYNEX will be
operationally ready to begin offering long distance service in New York by
October. The company also plans to offer services in Massachusetts by June of
next year, and in the rest of its seven-state home region no later than
NYNEX's goal, Anderson said, is to capture 20 percent of the
$10 billion in-region long distance market within five years. This market, he
estimated, is growing at more than eight percent a year.
NYNEX is a global communications and media company that provides
a full range of services in the northeastern United States and
high-growth markets around the world, including the United Kingdom,
Thailand, Gibraltar, Greece, Indonesia, the Philippines, Poland,
Slovakia and the Czech Republic.
The Corporation is a leader in the telecommunications, wireless communications,
cable television, directory publishing
and entertainment and information services.
FAX copies of recent NYNEX news releases are available free of charge, 24
a day. Call 1-800-331-1214 and an automated system will provide