SuccessStory: LocalTelecommunications Company

(All company and individual names changed)

 

Sales Opportunity: Statewide Telecommunications andInformation Network

Client: Commonwealth of Kentucky

 

“We know that what we’re out there doing is benefiting allthe citizens of Kentucky.  When we see all the services that we canprovide utilizing the technology we’re putting in place, we’re proud to be apart of it.”  Sheri Rose’s pride isobvious.  And the Project Director forthe Kentucky Information Highway (KIH) and 20-year XYZ Corp. veteran employee has good reason.

 

Smithsonian Award

Consider this:  InApril 1999, after being nominated by XYZ Corporation, the Commonwealth of Kentucky was awarded a laureatein the Smithsonian Institute’s InnovationCollection for the Kentucky Information Highway.  The award description read:

 

The Kentucky Information Highway is a public/private partnership [developedin partnership with the state's 20 local telephone companies] that provides astatewide, integrated communications and information network. This major stateinitiative puts Kentucky in the forefront in developing itstelecommunications infrastructure and breaking the barriers traditionallyimposed by geography, demographics or economics.

 

Where did this exciting story begin?  When the Commonwealth of Kentucky set out to create astatewide telecommunications network connecting all government offices for dataconnectivity and toll-service, they hired Andersen Consulting to study theidea.  Based on Andersen’s findings, thestate generated an RFP, asking for a statewide network, with a single-point-ofcontact for installation, repair and billing. 

 

A Desire forSimplicity

What prompted the move? In Kentucky, there were 20local exchange carriers.  In a typical scenario,XYZ Corp. may have had a circuit going through three local exchangecarriers.  The state would end up withthree bills for three different services at three different rates.  It was frustrating, cumbersome andtime-consuming. 

 

According to Rose, “XYZ Corp. didn’t want to lose thebusiness we already had and yet, because of all these other carriers, we knewwe couldn’t do it all ourselves.  Not tomention that XYZ Corp. couldn’t provide interlata service or intralata service.We were going to have to do some teaming.”

 

The RFP stipulated that while the state would be the anchortenant, they would allow other entities (per the existing statute) to purchaseoff the contract: state agencies, K-12 public schools, state universities andcolleges and city/county governments and municipalities.

 

Uniform Rate Structure

This arrangement presupposed a simplified rate structure,which was the state’s main request: Within the proposed “Kentucky Information Highway,” everyone would pay the samerate, regardless of their geographic location in the state. 

 

This uniform rate structure was part of the “Equity”initiative in Kentucky.  Education in the state had gone through the Education Reform Act, which addressedthe challenge of getting rural schools on the par with their urbancounterparts.  Telephone service ratesfor rural schools were often more expensive than in urban area.  The client was asking XYZ Corp. to averagerates across the state and break down the geographic barriers. 

 

The first step was to create a partnership – the LocalExchange Carrier Telephone Group (LECTG). XYZ Corp. was considered the “prime contractor” (60% share) with theother 19 companies as “subcontractors,” including GTE (30%), Cincinnati Bell(2%), and the remaining 17 (8%).  Allinstallation, repair trouble and billing would be coordinated through this newstructure.  There were still 19 differentcompanies but now, XYZ Corp. had stepped between them and the state and was theone entity dealing with all of them. 

 

Since the state also needed long distance service, XYZ Corp.teamed with Quest, who provided service for interstate and internationalcalls.  Now, instead of 20 companies todeal with, the Commonwealth would now have two: XYZ Corp. and Quest. 

 

Above and Beyond

The task of negotiating pricing arrangements and contractswith the 19 other companies and establishing procedures for installation andrepair was mammoth.  The client was trulylooking for creativity.  As Rose recalls,“If you asked them, they’d say that they didn’t think there was any way wecould put it all together.  They wereamazed.  The whole project was definitelyan interdepartmental effort on the XYZ Corp. side - we needed a lot of playersto pull it off.  It feels great to workfor a company that is so forward-thinking and progressive.”  On top of it all, XYZ Corp. came in andoffered better rates. 

 

In the bid against XYZ Corp. were ATT, MCI and KentuckyFiberlink.  In structure, all the bidswere the same, but price and our reputation as the incumbent providerestablished over many years had a lot to do with XYZ Corp. winning thebusiness.

 

XYZ Corp. soon realized that they couldn’t make it allhappen without building a new billing system. The team worked with the Info Tech group and built what was called the Consolidated Billing System, whichoperated outside the conventional legacy system (handling all otherbilling).  The 19 companies all sendtheir bills to XYZ Corp. through an EDI (Electronic Date Interchange) feed andXYZ Corp. then settles up with all the companies and the state.  Because the new billing system is very costlyto maintain, the team is looking at a new platform that returns to the legacysystem. 

 

A Pioneer for Change

With the KIH, the commonwealth of Kentucky has been the model forother states to follow.  Alabamawas the next state government to decide they wanted something similar, and XYZCorp. is exploring ways to migrate back to a legacy-based billing system.  Tennesseeis next in line.

 

While the KIH became operational in 1995 and XYZ Corp. has a10-year contract with the state through 2005 (worth approximately $15 millionannually), the program and its infrastructure continues evolve andimprove.  Because of the rate stabilityprovided by the anchor of the state government, XYZ Corp. was able to invest ina powerful ATM switching system.  ThisATM backbone will allow the Commonwealth to consolidate existing networks bymigrating their Frame Relay DS3s to ATM DS3 and OC3, which will  lower overall costs to theCommonwealth.  That translates to moreaffordable services to state agencies and simplified access of state servicesto its constituents.

 

Making a RealDifference

The real human impact of the system continues to revealitself as the program delivers a whole host of services to citizens of theCommonwealth that might otherwise not have happened.  The arenas impacted include: healthcare,education, state services, social services, courthouse services, and even inthe prisons. 

 

Healthcare Services

As Rose explains, “Thanks to the KIH technology that we’veestablished, we can now take an MD into a ruralhospital through tele-medicine - examining X-rays, delivering consultativeadvice and the like.”  Public health carefacilities across all counties will connect to KIH and enjoy immediatecommunication and information dissemination. Local health departments will nowenjoy instantaneous access to copies of birth and death certificates,immunization records, lab tests, sanitation inspection results, patientdemographic records, etc.

 

Education

The ATM enhancement  will support the newly formed entitycalled the Kentucky Community and Technical College System (KCTCS), theCommonwealth Virtual University (CVU) and the Commonwealth Virtual Libraries(CVL).  According to Rose, “The CVU willlink all the universities in the state and will allow a student to simply logon from home and actually earn a degree without ever entering aclassroom.”  First on-line classes beginin August 1999.    

 

Empower Kentucky Project

With a goal of improving the efficiency and delivery ofstate government services to its constituents, Empower initiatives include:simplified access to both the Revenue (tax) Systems and Commonwealth Services,which include health, welfare, job training and placement and job educationservices.  Other components includeTransportation Process Improvements, simplified Regulatory Services (electronicpermitting) and Internet access in public libraries.

 

Model Court HouseProject

Utilizing internet access, e-mail and file transfer, thisinitiative was designed to provide communications connections between localcounty courthouse offices and state government agencies.  The system can even provide on-site videoarraignment to prisons, which eliminates the need to take prisoners out of thejail.         

 

The Worker’sInformation SysTem (TWIST) Project

This automated social services system provides caseinformation to programs such as child protection, foster care, adoption,juvenile and adult protection -- 24 hours per day, 7 days per week.  

 

In 1997, in response to steady stream of calls from entitieswho want to piggyback on the attractive rates, the legislature voted to allowprivate schools and healthcare agencies join in as well.  Not surprisingly, the Commonwealth of Kentucky has begun to view theKIH as an economic development tool.

 

An Economic Development Tool

Rose takes it a step further: “As part of two legislativeacts: The Kentucky Jobs Development Act and The Kentucky Rural Economic DevelopmentAct, we’re pursuing a pilot program that would offer the same attractivetelephone rates to companies willing to relocate in eastern Kentucky and inessence, invest in those areas.  Sincethe KIH is a state-of-the-art communication system, technology is no longer abarrier to investment.”

 

Summing up, Rose says, “This technology is improving thequality of life of every citizen of the state. We’re citizens of the state and it makes us feel good to know that,through our work, we’re bringing economic development to the state.  We have a vested interest here and so we’realways looking for ways to support the states’ initiatives.”

 

END