【群面 四大 case 2】 CASE DISCUSSION BUSINESS/STRATEGY Interview Case Study （PWC） Telekenesis Inc. Price water house Coopers has recently proposed on, and appears to have won, a major engagement to cre

ate an information technology strategy for Telekenesis. Pric wate rhouse Coopers has worked for Telekenesis in the past, but has not done any significant work for over a year and a half. This is Pric water house Coopers' first substantial engagement with the company. Company Background Telekenesis was formed in 1992 by executives from four former Regional Bell Operating Companies (RBOCs) and two principals in Silicon Valley technology start-ups. One of the principals is from a start-up company that pioneered a new kind of wireless propagation technology. Telekenesis was founded on the principle that the current telecommunications industry is populated with companies who are almost congenitally incapable of optimizing their form of organization and culture to meet the competitive challenges of the 1990s. The founders believe that local loop technology, which relies on communication devices which are peers in a large technology community, where every device has a permanent and unchangeable identification, is the silver bullet of the telecommunications industry, and that the RBOCs are not ready or willing to exploit it. Local loop technology (LLT) is considered by RBOC management to be radical, unproven and unreliable. Telekenesis Inc. is modestly profitable, with $131,000,000 in sales and approximately 200,000 customers spread out over four adjacent, mostly rural geographies. Approximately 90% of its sales come from four small local telephone companies. The company's strategy is to use the operating experience and customer positioning of the four local telephone companies to develop and implement local loop wireless service or LLWS (often pronounced "laws"). The concept behind this service is based on the fact that the current phone companies control wiring to and from a central office facility. This facility is in effect a big switching box. The central office acts like a big hub with many spokes radiating from it. LLWS eliminates the central office and substitutes simple, unobtrusive, premises wireless relay equipment. There is at least one local loop server facility that is somewhat analogous to a central office but not needed to maintain service. The server facility is used to monitor quality and provide a trap for billing. Local loop wireless services are fully integrated. They include telephonic communication as well as cellular, pager, on-demand video, and "highway" services. Highway services permit companies within the local loop to communicate with each other as if they were on a large universal local area network. Computers located in both home and office are immediately interconnected by the local loop. Importantly, there are literally no wires involved in any of these services (except of course for plugging into the wall to get electricity). Physical customer hook-ups are non-existent. Customers are granted access, and services and information are secured through software interfaces in LLWS devices, such as television sets, laptop computers, pagers, etc. Telekenesis has a number of arrangements with software and hardware vendors to create LLWS devices. Understandably, the industry discounts LLWS as another "high tech California fantasy." Bell Core engineers, while acknowledging the future potential of local loop technology, dispute Telekenesis's claims that the bandwidth and quality is actually present in production, commercially available products to be installed in the real world. Telekenesis' doctrine is to completely convert all 200,000 current subscribers of the four local phone companies at once, with no phase in. Each of the four local companies will be converted separately. Telekenesis bought the four local phone companies in order to have large scale pilot sites for local loop wireless services. Telekenesis' fundamental business proposition is that the changing regulatory landscape will allow it to compete with local Bell telephone companies, providing a higher performance, lower cost alternative to the existing local phone companies for local and long-distance telephone service, paging, cable t.v., and cellular phones. Industry Trends The early 1980s were a time of turmoil for the telecommunications industry. For the first time in history, AT&T was deregulated and lost its monopoly status. This meant competition for AT&T where none had existed before. Long-distance was the arena of competition. "Telecommunications" includes much more than simply making a phone-call. It encompasses cable television service and network connectivity which brings interactive television, shopping forums, education and information services into the home. The phone lines that the telecommunications companies control enable computers to communicate from remote locations, and can gather

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