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David Dorman

In what may be the brass-knuckle marketing fight of his telecommunications career, David Dorman, the new president and CEO of Pacific Bell, is squaring off against communication giants AT&T, MCI, and Sprint, and 120 other smaller carriers. At stake is a share of California‘s lucrative long-distance telephone business.A recent ruling by the California Public Utilities …

In what may be the brass-knuckle marketing fight of his telecommunications career, David Dorman, the new president and CEO of Pacific Bell, is squaring off against communication giants AT&T, MCI, and Sprint, and 120 other smaller carriers. At stake is a share of California‘s lucrative long-distance telephone business.

A recent ruling by the California Public Utilities Commission opening long-distance to local telephone companies, including $9.2 billion PacBell, has prompted entrenched players to lash out in the business press. Dorman smiles, as if to acknowledge that snorting about the latest regulatory fiats is part of the posturing in the rapidly changing telecommunications field.

“There has been so much rhetoric by AT&T and others that if we’re allowed to get into the long-distance business or cable, we’ll somehow threaten their very existence, that their lives will be damaged, and citizens of the state will pay a dear price,” Dorman says sardonically in a smooth Georgia drawl. “But let’s be practical about this. AT&T is a $60 billion multinational corporation with profits that almost exceed our net revenues. Yeah, they’re shaking in their boots right now at the thought of competing with us.”

Lured away this past summer from third-largest long-distance telephone carrier Sprint Corp., Dorman, 40, was executive vice president and one of the company’s best and brightest. He was instrumental in convincing German and French telephone giants to cough up $4.2 billion for 20 percent of Sprint, and he played a key role in the near-merger with EDS.

Courted by Phil Quigley, chairman of PacBell parent Pacific Telesis Group, which serves California and Nevada, Dorman says the time was right for change. “I was coming off an exciting time and some high-profile deals,” he says. “There might not have been a more opportune time to leave the company.”

With nary a drill, Dorman was shipped to the fast-changing front, where battle lines constantly are splintering and reforming. In fact, a recent decision by San Francisco-based PacTel to spin off wireless operations into a separate, publicly traded company will force Dorman to think quickly.

The new company, AirTouch Communications, aims to skirt federal restrictions on the seven Baby Bells set in the 1982 breakup of AT&T, integrating long-distance service into wireless operations. AirTouch last month teamed up with three regional Bell companies-Bell Atlantic, Nynex, and US West-to build a nationwide wireless network. The aim is to compete with AT&T, which recently acquired McCaw Cellular Communications, the nation’s biggest individual cellular company.

Ironically, the spinoff and alliance open the door for head-tohead competition against PacBell, which generates more than 90 percent of Pacific Telesis’ revenues. As a result, Dorman plans to press with cellular service in California.

On the down side, the spin-off forfeits any potential economies of scale between PacTel’s wireless services and the business that AirTouch will be free to enter. In another move, PacTel, Bell Atlantic, and Nynex are speaking with The Creative Artists Agency, headed by Michael Ovitz, the most powerful talent agency in Hollywood, about a new venture to offer video entertainment for telephone customers on the East and West Coasts.

The youngest CEO in PacBell’s history, Dorman is expected to shake things up. He promises to retain an open-door policy he had at Sprint and a walk-aroundeverywhere management style. “People were glad to see that I knew where the company cafeteria was,” he says though senior managers who parroted his actions drew chuckles.

Ken Leon, an analyst with Lehman Bros., says Dorman brings a depth of marketing experience to PacBell, particularly in terms of new telecommunications products. But he’ll face an adjustment dealing with the slow-moving state regulatory bureaucracy. “He may be handicapped in the ways he’ll compete, versus where he was at Sprint,” Leon says.

In addition, Leon says, there’s the specter of the big boys-AT&T, MCI, and Dorman’s old alma mater, Sprint-eating into PacBell’s local telephone franchise. Other competitors, including cable television companies, also are circling the scene. On the flip side, awaiting a hearing is the motion filed by four Baby Bells this summer, asking Judge Harold Greene to vacate the 1982 consent decree that broke up AT&T and still prevents local telephone companies from competing outside their traditional market. A lengthy inertia was broken this summer when a federal court in Alabama granted BellSouth the right to provide cable TV service.

Dorman’s goals? Regulation permitting, within five years he wants PacBell to provide a range of communications products and services in the business, education, and entertainment markets. Providing interactive products through proprietary land lines is one option.

But perhaps the biggest challenge Dorman faces is the need to discard dull-edged customer service ideas rusted in place by a lack of competition. “We have a business that at its core is based upon monopoly services,” he says. “The anxiety of competition is preying on people here. ‘Competition is coming’ has been preached to these people for so long, it’s like the bogeyman. But competition is already here, and we’re holding up. The biggest issue I’m facing is getting people’s confidence that we can compete.

“I hope to bring a heightened sense of urgency to getting things done, recognizing that while we may have thought we had three years to get something done, maybe we have only a year,” he says. “Those who thrive on change will love it here. Those who don’t probably won’t have much fun.” 

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