Telecommunication companies in Wisconsin are reinventing and reinvesting themselves for the next wave of technology that will serve both residential and business customers.
That next wave will be broadband and wireless, and it will provide users with seamless voice, data, audio and even television programming through computers.
The cables, wires and jacks hanging out of the backs of our computers today soon will be discarded into the relic bin, right next to the rotary phone and the typewriter.
"We’re seeing the emergence of the network economy. One of the things we’re going to see is computers that you can talk to and can talk to you. The wireless network is huge, and it’s going to be even bigger in the next two years," said David Carlson, director of the Interactive Media Lab at the University of Florida.
Telecom companies are engaged in a race to bundle those services for the convenience of their customers.
Broadband is a network of wide-bandwidth frequencies that allows for a larger amount of information, including audio and video, to travel from one location to another at high speeds. The wider the band, the more can be downloaded or uploaded.
In Wisconsin, the companies vying for customers include: AT&T Inc., based in San Antonio, Texas; Verizon Wireless, a subsidiary of New York-based Verizon Communications Inc.; TDS Telecom and Metrocom, subsidiaries of Chicago-based Telephone and Data Systems Inc.; Littleton, Colo.-based Time Warner Telecom Inc.; Cedar Rapids, Iowa-based McLeod Inc.; and multiple cable and Internet service providers.
The competition for customer base, research, development and rollout is so broadband-focused that telecommunications companies are virtually no longer competing with each other, but with the cable companies in their markets, according to Lawrence Vanston, president of Austin, Texas-based Technology Futures Inc.
"Most competition for individual customers is still cable vs. the telephone companies," Vanston said. "As the telephone companies become more wireless-based and that becomes a bigger part of their business, then the competition will pick up."
Technology Futures performs market studies in different formats to analyze and predict where the telecommunications market is headed. "Broadband is the basis of technology growth," Vanston said. "The demand for broadband in terms of width is increasing and what is suitable today will not be suitable tomorrow and definitely not 10 years down the road.
"I think broadband will eventually replace the traditional telephone," Vanston said. "The problem comes when most people have broadband and most people are using voice over Internet protocol (VoIP) and wireless for voice, it becomes too expensive to be on a copper network. Once we hit this crossover, whoever is left (in the industry) will be changed to a broadband or wireless company."
It comes down to broadband and who can offer the fastest, highest-quality and affordable service, Vanston said, and the top three telecom competitors in the Milwaukee area are proceeding in different ways.
- AT&T wants to be the only company a customer goes to for communication and entertainment needs, said Paul La Schiazza, president of AT&T Wisconsin. (See accompanying story.)
- Time Warner Telecom plans to develop its broadband technology while continuing to market itself to large and enterprise-sized companies as the true alternative to an incumbent local exchange carrier (ILEC), said Jeff Lowney, vice president and general manager for Time Warner Telecom in Milwaukee and Chicago. (See accompanying story.)
- Madison-based TDS Telecom and its subsidiary, TDS Metrocom, hope to have the best of both worlds. David Wittwer, the chief operating officer for TDS Telecom who will become chief executive officer on Jan. 1, 2007, said TDS Telecom and Metrocom are reorganizing internally to become one entity that is broadband-focused with the ultimate goal of being the preferred provider of broadband in Wisconsin. TDS also is in the process of rolling out a wireless network that will ultimately enable the company to be free of leasing wire lines from AT&T Wisconsin, the area ILEC.
"The whole industry has evolved to broadband and Internet access," said Jon Ollmann, TDS Metrocom regional marketing manager for southeastern Wisconsin and northern Illinois. "Dial-up is not acceptable anymore. Customers want extensive broadband services at a low cost. We are continually developing and making our network or services robust for higher speeds and lower cost."
TDS Telecom and TDS Metrocom are on the verge of a significant internal reorganization that will bring the two companies together in a more seamless fashion, Ollmann said. TDS Telecom and TDS Metrocom are both headquartered in the same building in Madison, but in the past have had separate vice presidents, marketing departments and in some cases, focuses.
The TDS reorganization, which goes into effect April 1, deems Jim Butman and Lisa Cvengros as presidents of both the ILEC and competitive local exchange carrier (CLEC) markets. Butman currently serves as president of TDS Metrocom, and Cvengros serves as vice president of networking services and chief technical officer.
Jim Barr, current chief executive officer of TDS Telecom, announced his retirement in March, and the company announced that Wittwer will be his successor.
TDS Telecom brings telephone and data services to rural and suburban areas in the Midwest region and is the ILEC in those areas it serves, Wittwer said. TDS Metrocom was created in 1997 as a result of the Telecommunications Act of 1996, which allows for any company to compete for communications business in any market. TDS Metrocom is a CLEC and is available in the major cities within Illinois, Wisconsin, Michigan and Minnesota.
In the Wisconsin market, AT&T is the ILEC and therefore leases sections of the wire lines it has buried in the ground to competing companies, including TDS Metrocom.
TDS Metrocom has built its own network up over the years but does not have lines that connect directly to residences and businesses, Ollmann said. The sections of wire line that TDS Metrocom leases from AT&T are called the last mile of connectivity.
TDS Metrocom leases a 10-foot by 10-foot space in co-location buildings owned by AT&T so that the last mile of connectivity can be made, Ollmann said. When a person makes a call from inside a building, the call is carried along the last mile of connectivity to the co-location space, where it is then switched onto TDS Metrocom’s network, which connects to TDS Metrocom’s hub in New Berlin before it is switched again to the public telephone line, Ollmann said.
With the widespread adoption of broadband and a fixed wireless system, TDS intends to sidestep its dependence on the last mile of connectivity, Ollmann and Wittwer said.
The fixed wireless technology, which allows customers to have a VoIP phone system, high-speed Internet and video, is commercially available in the Appleton area and will be tested in the Madison market later this year, Wittwer said.
"We already have a high focus on broadband, but it is just going to continue to intensify," Wittwer said.
TDS invests about $150 million into its systems and services each year, and the percentage of that which goes into broadband is steadily increasing to about 50 percent, Butman said.
TDS plans to continue to offer a high-speed Internet connection to its customers in multiple capacities, Wittwer said.
"I think most customers are technology agnostic," Wittwer said. "They have a certain need for speed. They have a certain expectation of what they want to have, and we need to provide the technology to do that, whether DSL is the solution or fixed wireless is the solution."
Another solution that TDS is currently testing is IP TV, a technology that brings television stations to customers through their computer and through Internet protocol, Butman said. The stream of channels will be sent over Internet protocol to the computer, the customer will select the show that he or she wishes to watch, and the program will send a message to the customer’s television, Butman said.
"Our emphasis in all of our investments is putting more and more fiber optic or more wireless in the last part of the network that will be capable of delivering what we refer to as higher bandwidth," Butman said.
TDS also will continue to offer a television service through its partnership with Dish Network Service, LLC, based in Englewood, Colo., Butman and Ollmann said.
"That’s the next battleground, the living room, with the computer and the television," Carlson said. "I think one of the things we’re going to see is a server in the house that operates everything."
While investing in new technologies, TDS plans to continue on its focus of slow, controlled growth, Ollmann and Wittwer said.
"We don’t have aspirations to be nationwide," Ollmann said. "We are a conservative, slow-growth company and we try to take care of what is in our backyard before we do other things. We are very strategic in what we do."
Switching from being a voice-focused telephone company to a broadband provider of voice, data and more is a major turning point for TDS.
"It is a different mindset, which I think our employees have really embraced because they see it as a significant part of the future," Wittwer said. "I think we have seen it coming for a long time so we worked hard at getting the training and processes in place and we are much more data focused than we have been in the past. But clearly the competitive threat intensifies with broadband, and it is clear in most people’s minds that broadband continues to explode in terms of customer adoption rate. It is beyond even our expectation in terms of how quickly customers would transition to broadband from dial-up, which is good for the customer, it is good for the employees and it is a good thing for the company."
David Wittwer
- Job: The next CEO of TDS Telecommunications Corp.
- Education: Bachelor’s degree in accounting, U.W.-Whitewater; master’s degree in management quality, U.W.-Madison.
- Training: Certified public accountant.
- Years with TDS: 23
- Perspective: "I have grown up with TDS. I have been involved in literally every facet of the company. I have tried hard to learn as much about the business and as much about technology as I possibly can. I have not waited for opportunities to say, ‘It is not until I work in engineering that I am going to try to understand the technology.’ I have looked for ways to understand that technology ahead of time."
Changes at TDS
- Jim Barr will retire as chief executive officer of TDS Telecommunications Corp. on Dec. 31, 2006, and will be succeeded by David Wittwer, who is currently chief operating officer.
- The company will be reorganized and will combine the internal operations of TDS Telecommunications Corp. and TDS Metrocom LLC in Madison.
- The company will invest $150 million in its technology and services, and about half of that will be for development of its broadband capabilities.
- TDS has launched a new broadband system in Appleton and will test the technology in the Madison market later this year.
- TDS is currently testing IP TV, a technology that brings television stations to customers through their computer and through Internet protocol.
