Economy, Cable Take Toll on Bells - Multichannel

Economy, Cable Take Toll on Bells

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Pressure including the threat from cable competitors will continue to weigh
down the nation’s four Regional Bell Operating Companies, according to a new
report out from Stand and Poor’s.

The New York equity analyst firm issued a study yesterday on the wireline
telecom market, concluding the business climate for the Bells will be dicey for
the rest of 2003 and into 2004.

Among the things that will weigh the telcos down are a glut in fiber-optic
capacity, the continued economic doldrums and competition from cable and
wireless providers.

“Standard & Poor's expect these incumbent carriers to experience access
line declines of at least 4%, as U.S. households increasingly turn to wireless
and cable offerings,” said Todd Rosenbluth, S&P integrated
telecommunications services equity analyst and the survey’s author.

To combat this pressure, the telecoms will continue to delve into newer
services such as digital subscriber line data. 'Standard & Poor's believes
that telecom providers will continue to look outside their traditional voice
services for growth and take aggressive action to retain customers,” Rosenbluth
said.

“We also expect them to focus on cost cutting and asset sales to offset
revenue declines, pension-cost expenses, and high-capital costs of
2003.'

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