F.Corporate Capability (L.38.2.6)

F.Corporate Capability (L.38.2.6)

Offerors shall submit material describing their general corporate capabilities and qualifications in the field of telecommunications. This material shall include descriptions of corporate history and current commercial activities in telecommunications as well as a discussion of corporate plans or potentialities to expand into new, additional or extended telecommunications areas or services. The material provided shall be sufficient to establish the offeror as a significant player in the commercial telecommunications arena, and should address the offeror’s ability to satisfy current and likely future Government requirements.

1.0Sprint Capabilities

“Sprint....the first real global, integrated player on the telecom stage.”
Forbes Magazine, February 23, 1998.

Sprint is a global telecommunications company – at the forefront in integrating long distance, local and wireless communications. A forward-looking, growth-oriented company, Sprint is an agent of change in a rapidly changing environment. The corporate strategy is to be the first to market and to be the first to deliver the full benefits of emerging technologies to customers. An integral part of this strategy has been the numerous industry firsts pioneered by Sprint – we were the first carrier to operate a 100 percent digital, fiber-optic network; the first to deploy SONET (synchronous optical network) and bi-directional SONET rings, increasing both speed and survivability of the Sprint network; the first to introduce ATM (asynchronous transfer mode) for increased data transmission speeds; and the first to use wave division multiplexing, again increasing the capacity of the Sprint network. Behind these firsts is a company committed to the following vision: “To be a world class telecommunications company – the standard by which others are measured.” Figure 2.F.1-1 compares some of the Service and Technology measurements.

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1.1Sprint History

Although Sprint Communications Company was formed on July 1, 1986, with the formation of an equally-owned partnership between GTE Corporation and United Telecommunications, the history and company roots in telephony date back to 1899. On this date, Brown Telephone Company was started by C. L. Brown; this company eventually grew to become United Telecommunications. As a local telephone company, it had established its first long distance circuit by 1900, and by the 1950s, had developed into the third-largest independent telephone company, doing business in five states. Through subsequent acquisitions and partnerships the company grew to become what we now know as Sprint.

The fiber-optic network infrastructure of Sprint was started in 1970 by Southern Pacific Communications Company. The routes initially followed the railroad right-of-ways. In 1983, the company was acquired by GTE Corporation and became GTE Sprint Communications Corporation. During that same year, GTE Sprint became the first specialized common carrier to serve all 50 states. By June 1986, Sprint had 2.6 million customers who were able to call any telephone in the United States and 25 foreign countries. GTE Sprint was the nation’s third-largest long-distance carrier and had 6,200 employees nationwide.

US Telephone, a company formed in 1979 and then the nation’s fifth-largest long-distance company, was purchased by United Telecommunications in 1985, and became US Telecom. Headquartered in Kansas City, Mo., US Telecom originated long-distance calls from 91metropolitan areas in the United States through its all-digital, fiber-optic network. US Telecom, including its data arm, US Telecom Data Communications Services, was combined with the resources of GTE Sprint and GTE Telenet in 1986. This union resulted in a strong, technologically superior, and financially stable force to satisfy the needs of large corporate customers. Sprint became a major force in the long-distance industry in 1988, by completing the transition that moved all Sprint customers to its nationwide fiber-optic network.

In early 1989, United Telecommunications purchased an additional 30.1percent interest in Sprint from GTE Corporation. With United Telecommunications as the managing and majority partner, US Sprint Communications Company Limited Partnership was able to speak with one management voice in pursuit of its strategic objectives in a quickly changing industry. As of January 31, 1992, United Telecommunications completed the buyout from GTE of the remaining 19.9 percent interest in Sprint. Effective February 26, 1992, United Telecommunications officially changed its name to Sprint Corporation.

Today, Sprint is the only global telecommunications provider offering a full suite of capabilities – long distance, local, wireless and Internet. In just one year, Sprint PCS, our wireless venture, initiated service in X metropolitan markets, and plans to expand to X. Global One, the joint venture between Sprint, Deutsche Telekom and France Telecom, achieved strong acceptance from multinational companies, with revenue exceeding $1.1 billion in 1997, and is firmly established as the leading international telecommunications alliance. Sprint recently announced a long-term strategic alliance with X. to create a powerful Internet access service that provides Sprint with a significant enhancement to its strategic investment in the Internet market.

1.1.1Sprint Long Distance Division

The Long Distance Division provides global voice, video and data communications services to more than 8 million customers. It also provides voice services to more than X countries and locations, including connections to 100percent of the world’s direct-dial countries. Sprint also owns and operates X, the world’s largest public data network, with switching centers in more than X.

Long-distance markets include residential; small, medium, and large businesses; domestic and international; and federal, state and local Governments. The company is developing a presence in emerging multimedia markets through rapid deployment of value-added services that are portable, customizable, and easy to use.

Sprint Paranet

In late 1997, Sprint acquired Paranet, Inc., a leading provider of integration, management, and support services for distributed computing technology. The acquisition extended Sprint’s position as the World’s leading data carrier by augmenting the company’s superior data products and services with Paranet’s unique expertise in LANs and distributed network systems.

Called Sprint Paranet, the new business unit will provide a comprehensive menu of network and systems management services that will allow more companies to outsource all or part of the design, implementation, and management of their distributed computing infrastructure— desktop to desktop. Sprint Paranet offers business and Government customers the ability to quickly and cost-effectively use network technologies to increase their competitiveness.

1.1.2Sprint Local Telecommunications Division

Sprint’s Local Telecommunications Division provides local telephone service through more than X. X.

Local markets include residential; small, medium, and large businesses; and federal, state, and local Governments. The operating companies also provide access to local customers for long distance companies. In addition to regulated services, Sprint serves growing markets for unregulated, value-added services, inside and outside its traditional territories. The company is positioned in growing markets for interactive and multimedia services including telemedicine, distance learning, financial, and entertainment applications.

1.1.3Sprint Alliances, Partnerships and Joint Ventures

Sprint has been formulating alliances, partnerships and joint ventures on a global basis since the early 1980s to better serve the needs of our growing base of multinational customers. We have sought alliances that complement our unique combination of assets in order to offer our customers the most comprehensive package of services. As a result of this strategy, Sprint is positioned today as the only carrier that brings all the piece parts together – long distance, local, global, wireless and Internet. Together with our partners, we are taking the necessary steps to create a single-source provider that will define communications in the 21st century.

The following sections describe our major alliances, partnerships, and joint ventures.

Global One

One of the most important partnerships in the telecommunications industry was launched on February 1, 1996. Sprint, France Telecom and Deutsche Telekom developed a global partnership that offers superior and cost effective global telecommunications services to Government, business, consumer, and carrier markets worldwide. This partnership became Global One.

The information systems infrastructure of Global One will be capable of supporting multi-currency and multilingual billing, consolidated billing and reporting, and global service management.

From the very beginning, Sprint – through Global One – has been able to offer corporate network services in more than X countries using over X points of presence. X.

Sprint PCS

Sprint PCS, a partnership between X., launched a joint venture to provide the country’s largest 100percent digital, 100percent personal communications system (PCS) network. Sprint, along with its partners in the venture, have the infrastructure, financial resources, strategic alignment, marketing presence, and strong local and national recognition needed to successfully compete in the PCS market. This venture makes clear economic sense for both telephone consumers and the partners. With nearly X cable miles in place today, the joint venture’s existing facilities pass almost one third of American homes.

X

X and Sprint recently announced a long-term strategic alliance that creates one of the industry’s most powerful Internet access services. Together, X and Sprint will create a single, unified Internet service that will have the potential to reach millions of new customers. The alliance enables Sprint to continue to build its brand recognition in the Internet market and deliver Internet access services to its large telecommunications customer base, while focusing on the marketing and networking capabilities that are its strongest asset.

Sprint Telecenters

When Sprint/United Telephone Florida opened its doors to outside clients on January 1, 1993, it had 35 employees. Since then, it has grown so fast that it won the “Rising Stars” industry award for the third consecutive year in 1996 as one of the fastest-growing telemarketing companies in America. In 1996, with more than 1,000 employees, Sprint spun off its telemarketing business into a new subsidiary based in Central Florida.

X is a new approach to doing business. More than just the next generation of telemarketing, X provides a single source for a full spectrum of marketing support and direct marketing services. Everything from inbound and outbound telemarketing to research, interactive voice services, Internet response handling, and even 800/900 services are provided to Fortune 100 companies. A partial client list includes the X.

1.2Sprint’s Financial and Corporate Resources

As of December 1997, Sprint had net operating revenues of $14.9 billion and total assets of $18.1 billion. This strong foundation will continue to enable Sprint to make investments that will help drive future growth. The following are Sprint’s 1997 financial results by operating division:

Long Distance

Long distance revenues increased 6.8 percent to a record $2.31 billion in the fourth quarter from $2.16 billion in the fourth quarter 1996 and were up 2.7 percent from $2.25 billion in the 1997 third quarter. Operating income increased 23.1 percent to $316 million from $257 million in the fourth quarter a year ago and grew 9.8 percent from $288 million in the previous quarter. X.

For the year, long distance revenues increased 7.9 percent to $8.95 billion from $8.3 billion in 1996. Operating income rose 13.6 percent to $1.12 billion from $984 million.

Minutes of use in the fourth quarter grew 12 percent compared to the same quarter a year ago and rose 2 percent from the third quarter in 1997. For the full year, calling volumes rose 14 percent. Operating margins were a record 13.7 percent in the quarter, a strong increase from 11.9 percent in the fourth quarter 1996 and 12.8 percent in the third quarter 1997.

Quarterly operating profit exceeded $300 million for the first time and the improvement in operating margins was notable given the pricing and competitive pressures the unit faced. For the second year in a row, revenues and calling volume growth rates led Sprint’s major competitors.

Local Telephone results

In 1997, Sprint’s local telephone revenues grew 2.7 percent to $1.32 billion in the fourth quarter from $1.29 billion a year earlier. Operating income was $309 million, up almost 1 percent from $307 million. Results were impacted by the sales of certain local telephone exchanges, additional expenditures for vertical services initiatives and to support rapid growth in our Nevada properties and an increased provision for bad debt.

Product Distribution and Directory Publishing results

Revenues increased 26 percent to $377 million in the fourth quarter from $299 million in the fourth quarter 1996. Operating income rose 14.9 percent to $59 million from $51 million. The improvement was driven by increased sales to affiliates. For the year, revenues grew 19 percent to $1.45 billion and operating income was up 15 percent to $228 million.

Joint Ventures

Sprint's fourth quarter results included after-tax losses of 36 cents per share for Sprint PCS, compared to 10 cents per share in the fourth quarter a year ago, and 14 cents per share associated with Global One compared to 5 cents per share a year ago. For the year, after-tax losses from Sprint PCS were 94 cents per share compared to 27 cents per share in 1996, and were 33 cents per share from Global One compared to 15 cents per share a year ago.

Global One continues to make solid revenue gains with revenues in excess of $1.1 billion in 1997. In addition to major contract wins, the venture is making strong progress in the carrier transport business. Operating losses have exceeded our expectations, due to the slower than expected integration of the parent companies' networks and other start-up related costs. Actions are being undertaken to reduce the operating losses.

1.2.1Sprint’s Industry Achievements

Sprint has set the standard for a new world of telecommunications and continues to lead the industry in developing innovative solutions. Sprint's numerous accomplishments include:

• A comprehensive range of voice, data and video services to more than 30 Federal Government agencies under the FTS2000 contract and to other Government agencies through more than 200 non-FTS2000 contracts

• Design and construction of America’s first and only nationwide, 100percent digital, fiber-optic network for voice, data, and video transmission

• Expansion of our fiber backbone around the world, with significant investments in over 49 submarine fiber-optic cable systems worldwide

• Deployment of Signaling System 7 network-wide, enabling us to provide better security, expanded 800 capabilities, and built-in error detection and correction mechanisms for our customers

• In July 1997, transition of more than half of long distance traffic to the Sprint “bulletproof” SONET network, creating a new industry standard in network reliability and exceeding customer expectations for service reliability. Sprint transitioned approximately 80 percent of its traffic by the end of 1997 and will complete the transition in mid-1998.

• Introduction of the first nationwide public frame relay service

• Design and installation of more than 250 private data networks

• Ownership of the United States end – or one-half – of PTAT-1, the first privately owned, transatlantic fiber-optic cable system

• Operation of the world’s largest public data network, X a leading supplier of worldwide messaging services and systems

• Integration of fiber optics into Xt, the first public data network with a fiber-optic backbone

• Videoconferencing for longer than any other domestic carrier, with interconnectivity among thousands of rooms in 38 countries

• Service to all of the world’s direct-dial countries

• Service to 93 percent of the 800 largest telecommunications users in the United States

1.2.2Sprint’s Corporate Achievements

In addition to our industry achievements, Sprint has received numerous awards for corporate participation and support. Some of these are described below:

• Sprint’s X, was named “Technologist of the Year – 1997,” by America’s Network Magazine.

• X, was named “Marketer of the Year – 1997,” by Brandweek Magazine.

• In August 1996 and 1997, J.D. Power and Associates announced that Sprint was the #1 carrier for customer satisfaction on residential long distance service.

• In July 1996, Sprint received the 1995 Award of Distinction from the U.S. Small Business Administration. The award recognized Sprint’s Government Systems Division for its efforts under the FTS2000 subcontracting plan, which received an “A” rating on the last audit. Sprint was exceeding its small business goal by more than 25 percent and its small disadvantaged goal by more than 300 percent.

1.3Current Commercial Activities

Sprint designs, implements and supports all customer network requirements. This is demonstrated by the designation of Sprint as primary carrier by such sophisticated users asX. Sprint was also selected by X as the recommended interexchange carrier for its members.

1.4Plans for Growth and Development

Commercial, residential and Government consumers of communications services are seeing the convergence of three worlds – TV/radio, telephony and data. To meet the anticipated demand, forward thinking network providers are building multi-service single integrated Broadband Integrated Service Digital Networks (B-ISDNs) to carry their current separate service network traffic, and to be positioned to build future Broadband and multimedia services. Sprint believes that ATM over SONET B-ISDNs will be the single transport and control infrastructure, with integrated service and management capabilities, and is moving in that direction.

Sprint understands that services can appear overnight and ramp up at astronomical rates, that new technologies can create services with unexpected demands on specific network resources, and that customers will want these services highly customized. To meet these needs, Sprint formed a Broadband/Intelligent Network (BB/IN) task force in 1993 to develop the goals, plans, and tasks need to bring Sprint Long Distance Division into the Broadband era of services.

X

In 1994, as frame relay, Internet and dial networks started growing dramatically, Sprint formed a second task force to address the issues of how to best design data services over the next five years. X

To incorporate the recommendations from the task forces and others, Sprint updated itsX, developed in 1980, to ensure that our implementation of X is “future proof.” The combination of all network, service, management and computing components into one network is an enormous task and must be carefully planned, developed and tested in stages before actual cutover.