SBC filed an application in 1997 to provide long distance service in the state of Oklahoma, but the FCC rejected their request. At risk in a competitive environment are the access and intraLATA toll revenues currently being generated by the RBOCs. California is particularly at risk because of its high ratio of intraLATA to interLATA toll. While the risk to SBC in California is high, so are its opportunities. Non-California markets are the opposite, posing low risk and less opportunity in terms of long distance entry.
Profit margins are low with long distance rates dropping over the last five years.
There is little to offer in terms of new products and services in this market. While growth is minimal and revenue somewhat vulnerable in the long distance market, this product is essential to the one-stop shopping concept that many communications companies see as the Holy Grail. The Internet is seen as the number one growth market in the communications industry. As an LEC-ISP, SBC has a tremendous opportunity in this 1 billion a year market. Internet telephony is a market that offers opportunity to ISPs.