Socket Telecom featured in The Columbia Tribune as being a local business telecommunications competitor to CenturyTel

March 22, 2005- Starting a phone company isn’t simple. Just ask Socket Telecom LLC, an affiliate of Socket Internet and the latest contender in the phone service market.

"We’ve spent millions, easily millions in hard dollars and soft dollars," said George Pfenenger, majority owner and chief executive office of Socket Holdings Corp.

It also has taken time. About four years ago, Socket secured a state license to operate a phone company. Socket since has hired lawyers to deal with the regulations, acquired the latest transmission technology, trained a staff and practiced on a few customers.

Now they’re ready to roll it all out. The company plans to launch a media and sales blitz to promote its presence in the marketplace.

It’s a big gamble for the plucky company Pfenenger and John Dupuy started a decade ago to offer Internet access. But the payoff could be enormous. The estimated annual value of Missouri telephone service is $10 billion, according to a report from the Missouri Telecommunications Industry Association. And three major players go after it: SBC, Sprint and CenturyTel.

Socket Telecom will start by offering local and long-distance service only to businesses. Residential service should follow.

"There are things we are experimenting with and testing now that may turn into a viable residential business model," Pfenenger said. "We’re watching what’s going on in the legislature. If the current set of rules change, the model might change."

The company is banking that its reputation and base of 30,000 statewide subscribers from its core Internet business will open doors for their phone service segment. The plan is to bridge the segments to give customers more value, but the company is keenly aware of the need to keep the two companies separate in the public’s mind.

"This is not Internet phone service," said Carson Coffman, co-owner and company vice president. "This is a new phone company. We have our own network and phone switch, we have our own phone numbers, and we can allow customers to use their existing phone numbers if they choose."

Socket Telecom will offer a menu of options including caller identification, call waiting, voice mail and call accounting. The company also plans to tout its technology and know-how to build communication systems for business customers that bridge telephone service with the Internet and do some fancy footwork, such as linking telephone messages with office management software. And features like call accounting, which breaks out billing detail by sales representative that can be downloaded into spreadsheets for sorting and analysis, should appeal to businesses with major phone needs such as call centers and mail order companies.

So what’s the cost? "That depends," Coffman said. "That’ll be decided on a case-by-case basis," he said. "Our salespeople are trained to understand what the customers need and want. We have some basic deals for $400 per month, but we’re working on one now that’ll be about $80,000 per month."

Crafting a cost-effective communications system for business owners using the latest technology is the company’s strategy, Pfenenger said, but the focus is value, not cost cutting.

"This is a business that’s been without competition for about 100 years," Pfenenger said. "That’s created two problems: cost and a limited set of services and features. They’ve tried to shove all hands into the same gloves."

Socket Telecom needed to sign an interconnection agreement with chief rival CenturyTel - remaining elements of the Telecommunications Act of 1996 require such negotiations. Socket got the contract, but it’s an agreement that will need perpetual revision.

Regional phone companies such as CenturyTel bought fragments of larger phone systems after the AT&T breakup in 1984. Monroe, La.-based CenturyTel took over Verizon’s book of business in 2002, giving them 3 million customers in 22 states, including Missouri. The company, whose shares are traded on the New York Stock Exchange, recently reported fourth-quarter earnings of $85 million and free cash flow for the year of $462 million. It’s a force for Socket Telecom to reckon with.

"We put an emphasis on service and on price," said Don Neely, local spokesman for CenturyTel. "We put packages together for Internet and phone services, and we can save money in that regard. We’re not going to sit idly by and hand the business off."

The competition is sure to heat up. But Socket has learned patience so far, from just getting the operation up and running. And it’s a long-term play, a process of building a solid brand and a good reputation for quality phone service, Coffman said.

"We’re not going to go out and just get a whole bunch of customers by cost cutting," he said. "We’ll build the business by building communication networks for customers."

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