D&E in the News
01-10-08 - New Direction
American Executive.com
Liz French
More than 95 years ago, D&E Communications began providing local telephone services to customers in Central Pennsylvania. Today, the company remains a rural local exchange carrier (RLEC), but a changing and competitive market has driven it to make the development of a solid broadband network a top priority.
"Today, fewer people are relying on a wired home phone line than yesterday, which means we're losing customers. But we've adapted by embracing broadband Internet technology. That is how businesses operate and how people communicate. We've invested in our network and back-office systems to meet that demand," said James Morozzi, president, CEO, and director of Ephrata, Pa-based D&E Communication.
Not only is D&E providing broadband services in its original territory, but it has delved into seven competitive local exchange carrier (CLEC) markets to compete head-to-head with Verizon. Morozzi explained that in a CLEC market, a telecommunications provider (in this case, D&E) can compete directly with other, already established carriers, often referred to as incumbent local exchange carriers (ILEC).
In its CLEC markets, D&E is targeting medium to large business customers, and has already built facilities in Reading, Lancaster, State College, and Harrisburg, The company offers its CLEC markets traditional phone services, but Morozzi said his team is finding that the majority of business customers today demand big data pipes. As a result, D&E's DSL/broadband services grew more than 41% in 2006.
Gaining Focus
When Morozzi Joined D&E about two years ago, he noticed that although the company was filled with motivated, energetic employees, it needed direction. "I wanted to focus on accomplishing a few tasks as opposed to trying to do everything and not doing any of it well. For me, it was important to drive to CLEC business and broadband growth," he said.
And that is exactly what the company has done. Today, D&E serves about 129,000 traditional phone customers, 44,000 business and residential customers in CLEC markets, and 33,000 broadband customers.
D&E has invested heavily in a fiber network, replacing traditional phone lines in its existing markets and planting new roots in CLEC markets. This year it purchased a 26-mile fiber optic network from Access Fiber Solutions. The deal included contracts to provide Gigabit Ethernet Service to the West Shore and Middletown school districts in Central Pennsylvania. With a secure foothold, D&E will soon start acquiring other business customers in the greater Harrisburg area.
D&E is also creating a strong backbone to support its fiber network. In fact, over the past year, the company has augmented its traditional circuit switching technology with an IP softswitch. "When you make a phone call using a circuit switch, you are actually seizing a pair of copper conductors all the way from, say, Boston to Philadelphia. That call goes through a long series of intermediate switching stations as different phone companies have enabled their switching platforms to talk to one another," explained Morozzi.
An IP switching platform, in comparison, breaks down a digital phone signal into a data packet and sends those packets over an Internet connection. When the data packets are received at the other end, the electrical signals are converted back into sound waves. Using this platform, D&E is able to offer transparent local area network (LAN) services and multi-protocol label switching (MPLS), which speeds data communication over combined IP networks.
Homing In
To supplement the technology and services provided to business customers, D&E operates a Systems Integration division. Working with partners such as LAM Systems Inc., a custom computer manufacturer and provider of technology solutions, D&E provides professional IT support services. LAM has more than 14 years experience serving the government, education, and commercial markets, making it a perfect fit for D&E.
"Businesses are looking for people who can design LAN's and perform maintenance and server and router upgrades," said Morozzi. "We have partnered with a local computer manufacturer that has strong relationships with the business community here, and we bring the professional services expertise. We see a distinct advantage in being a one-stop shop for our business customers."
Using ADSL-2 Plus and HFC technology, D&E also offers more than 100 cable TV channels to 7,000 residential customers via traditional phone lines and coax cable. The service was launched a couple of years ago as a trial but customer reaction warranted developing the service to full scale in the area.
In an effort to focus on broadband services and CLEC markets, D&E recently divested a segment of business dedicated to installing and maintaining traditional phone systems for business customers to eCommunications Systems Corporation (eComm). "Our voice systems business was not aligned with the direction I wanted to take the company," said Morozzi, explaining that D&E now has a relationship in which it provided access services and eComm provides the phone equipment. The relationship also gives D&E a 10% equity ownership in eComm.
Clearing the path
To increase the efficiency in the filed, D&E has invested heavily in automated dispatching technology using traditional Blackberry's. Previously, an employee in the dispatch center would receive customer calls and relay the location and type of problem to technicians. Several phone calls between the dispatch center and the technician would take place to troubleshoot.
Now, the technician has access to a number of databases, service records, and test mechanisms through the Blackberry, eliminating the back and forth calling. The new system also allowed D&E to categorize problems and predict how long each service call will take, meaning technicians' time is better allotted. As a result, out-of-service hours are down by 9% compared to 200, and the average repairs time has decreased dramatically.
Automated dispatching and advancements in screening and routing customer service calls enabled D&E to decrease staffing by 11% last year. That compounded with first quarter 2007 operating income of 5.5 million, as compared to 4.9 million during the same period in 2006, sets the company down a clear, straight path toward success.