Former Baby Bells Verizon, Qwest and AT&T no longer share the same priorities, as evidenced in their presentations to investors

If there are similarities among the four surviving companies from the group once known as the Baby Bells, they become much less obvious almost daily. At this year's Citigroup Entertainment Media & Telecommunications, an annual event that kicks off the investment year, Wall Street and industry analysts heard four presentations with many more contrasts than similarities.

Verizon Chairman and CEO Ivan Seidenberg touted the success of Verizon Wireless and sought to build confidence in the business case behind his company's multibillion-dollar investment in fiber-to-the-premises, known as FiOS. BellSouth CEO Duane Ackerman kept his presentation minimal and emphasized BellSouth's continued efforts within region. Qwest Chairman and CEO Richard Notebaert stressed his company's improved performance and ability to generate profits by meeting industry norms. AT&T Chief Financial Officer Rick Lindner was all about meeting small and medium-sized business needs.

Industry analysts say the changes reflect the fact these companies no longer have the same type of customer base, networks and issues to address.

“These companies have different priorities, and I think their presentations reflected that,” said Lisa Pierce, Forrester Research analyst. “I think, for example, that IPTV and FiOS are important to AT&T and Verizon, respectively, but not in the same priority.”

In fact, the companies have been moving in different directions for the past five years, said John Celantano, president of Skyline Marketing, and their differences have only become sharper with the AT&T/SBC and Verizon/MCI mergers.

“They have recast themselves in very different ways,” he said. “We've been telling our clients for five years, there is no such thing as an RBOC market — they have different strategies, different directions, different customer base and different installed base, and they are adopting different strategies in how they see the future.”

In front of the investment community, “everyone is naturally stressing their strengths,” said Paris Burstyn of the Yankee Group. He said he sees both BellSouth and Qwest as “having been cornered with small customer bases that can't justify investments that keep pace” and questioned whether they can achieve the economies of scale of their larger brethren.

None of the four presentations addressed larger enterprise customers to any great extent, and that's a potential problem, Pierce said.

“Business services wasn't on Ivan's short list, and if I'm an MCI employee or an MCI customer, that has to be a concern,” she said. “Rick Lindner stressed small to mid-sized business services because that's the majority of their customers, and they have been overlooked and underserved for many years. But that's clearly being driven by legacy SBC management. It's going to be a problem over time. SBC is resisting what it takes to be a true global player, which is, you gotta move to New York.”

However, Celantano said, the mergers are still in their early stages, and it may be too soon to talk about corporate initiatives that are just now in the works. He was encouraged to hear Notebaert mention both FTTP in greenfield environments and fiber-to-the-node (FTTN) in overbuilds.

“This is the first time we've heard him talk much about it,” he said. The local loop strategies of the four companies remain diverse. Although AT&T is pushing FTTN up to 3000 feet, BellSouth is moving much closer — to within 500 feet of a customer — and Verizon is going all the way home, for now.

“We still see FiOS as hugely expensive,” Celantano said. “We still expect Verizon to adopt some form of fiber to the node.”