When Krista Tillman left her teaching career 23 years ago to become an engineer with Southern Bell, she joined a company about to undergo the most wrenching change in its history: the divestiture of the old AT&T Bell system. Today, as president of BellSouth’s North Carolina operations, she faces change on an even larger scale: the recreation and overhaul of the entire telecommunications industry into a fully competitive market.
“When I joined the company, we were predominately a voice medium,” says Tillman. “But we evolved from a ‘what number please?’ operation as Southern Bell to a bits and bytes enterprise as BellSouth, transmitting information all over the world.”
Part of the change was driven by extraordinary leaps in technology. Digital switches – essentially mammoth computers – replaced old electro-mechanical equipment. Fiber optics were developed and the Internet was born, ushering in the Information Age and triggering an explosion of demand for communications services.
“Back in the 1970s, the most exciting thing we had to offer was TouchTone versus rotary dial telephone,” Tillman points out. “Then during the ‘90s, we moved through voice mail into e-mail and then to interactive paging. Today, fully two-thirds of the traffic on our network is data.”
Legislation brought other changes and challenges. Arriving in Charlotte in mid-2000, Tillman immediately found herself immersed in BellSouth’s efforts to fully implement the provisions of the Telecommunications Act of 1996, federal legislation that mandated local competition, irrevocably altering the telecommunications market.
“Implementing local competition has proven to be far more difficult than anyone imagined,” she says. “The regulatory requirements at both the federal and state levels are very difficult to meet. But we succeeded, and today approximately 17 percent of our market is served by competitors.”
Recognition of BellSouth’s success in meeting its obligations under the law came in September 2002, when the Federal Communications Commission (FCC) granted permission for the company to re-enter the long distance market, a line of business from which it had been barred in 1984, when BellSouth split off from AT&T.
Over the years, business and residential customers had frequently expressed a desire for BellSouth to offer long distance service, Tillman recalls. “Time and again, I heard from customers who wanted to know why they could not get long distance from BellSouth,” she says. “Now that we are back in that business, we have seen thousands of business and residential customers switching to our service. As we had predicted, our return to that one section of the market has stimulated competition in every sector of the telecommunications market.”
This past December, the FCC approved long distance for the last two of BellSouth’s nine states, making the company the first in the nation to bring its entire region through the maze of regulatory and legal requirements and meet the goal of the Telecom Act. For Tillman, reaching that milestone, while satisfying and exciting, merely sets the stage for even more momentous changes to come, including a market upheaval.
As she considers the economics of the industry relative to governmental regulation, Tillman is reminded of the book and film, “The Perfect Storm,” in which isolated events converge with devastating impact. Over the past several years, demand for all telecommunications services has grown, according to FCC data. Despite this, the industry is undergoing tremendous economic pressures. Over the past two years, the national telecom industry has experienced the loss of 500,000 jobs and more than one trillion dollars in market value.
“New technologies, increased competition, and the economic climate have brought us to an unprecedented point in the history of this industry and this country,” Tillman says.
It is the converging force of governmental regulations – governmental efforts to manage a competitive industry – that concerns Tillman the most. “The FCC has operated under the assumption that it could control, through regulation, the way competition develops in the market,” she explains. “While new regulations have had the effect of jumpstarting local competition, there have also been serious unintended consequences.”
One such regulation is the requirement that BellSouth and other established companies sell network components and services to competitors at prices below cost. “While this has stimulated competition quickly, it is neither efficient nor effective for the long term,” Tillman maintains.
“What company is going to continue to invest capital dollars if it is required to provide competitors with products at below cost? And what competitor would invest capital when it can purchase products cheaper than it can produce them?
“This policy would not create a viable, sustainable competitive market in any industry and it will not in telecommunications.”
She also points to the trickle-down aspect of this policy as already hurting North Carolina’s economy. “Producers of telecommunications equipment, such as Lucent and Nortel, are being severely hurt by the continuing reduction in capital spending. And that means they are no longer able to invest in research and development for future products and services.”
Winds of change are already blowing in this arena as the FCC prepares for a comprehensive review of competitive policy this month. In Congress, legislators on both sides of the aisle are also talking about the best way to assure long-term growth as well as competition.
“I don’t argue that the time has come for de-regulation,” Tillman says. “But it is imperative that we strike the appropriate balance of regulation and market forces in today’s competitive industry. We simply must get the rules right.”
In her current position, much of Tillman’s attention and energy is devoted to public policy matters. But regardless of the issue, her previous experience in the customer markets organization is never far from the surface.
“My number one goal for BellSouth is that we continue to provide excellent customer service,” she says. “It is what our customers expect and deserve and I will not settle for anything less.”
Continual focus on customers is one of the keys to BellSouth’s competitive strategy.
“Our strategy for dealing with customers is to understand, and anticipate, the lifestyle changes and the business cycle changes that our customers are going through,” Tillman affirms. “Then to deliver products and services that meet needs and complement lifestyles with quality and consistency.”
Customer focus is expressed in many ways at BellSouth, Tillman points up, such as the Network Reliability Center. Technicians at this high-tech center, located in north Charlotte, monitor 900 switches and 35,000 remote terminals in North and South Carolina, Florida, Louisiana and Mississippi to assure that the network functions properly. Open around the clock, the Center averages 10,000 alarms daily addressing problems such as equipment malfunctions, power outages, doors left open, and cable cuts.
During the December 2002 ice storm, the Center’s alarm count more than tripled. “In the aftermath of the storm, many remote terminals reverted to back-up batteries,” Tillman says. “Our technicians did a fabulous job restoring service by deploying hundreds of mobile generators and repairing lines. Many worked 12 to 15 hours a day before going home to cold houses, returning the next day to the same grueling schedule. These people exemplified the definition of community service and that’s what BellSouth is all about.”
Prior to coming to North Carolina, Tillman was president of Small Business Services, where she was responsible for all customer operations for BellSouth’s 1.1 million small business customers. Earlier in her career, she served as operations vice president for Interconnection Services, where she was responsible for ordering, testing, maintenance, billing and collections for all carrier services. For two years in the early ‘90s, she served as director of public policy planning at BellCore in New Jersey working closely with other Regional Bell Operating Companies on public policy and regulatory issues.
Carol Jarman, regional vice president for BellSouth advertising and publishing, believes this diverse background is one of the secrets to Tillman’s effectiveness at leading in times of change.
“Krista has a great vision for BellSouth, where we have been and we are going,” Jarman says. “She not only understands BellSouth’s heritage and how the company works, but she also sees how we can build upon that to serve customers and our communities better in the future. And she knows how to make things happen.”
Tillman said broad experience is one of the advantages of working for a large company for a number of years. “Over the years I’ve developed a network of friends and peers with whom I’ve worked,” she says. “Some people see networking as handing out business cards at seminars or business dinners. To me, networking is having people you can call upon to discuss issues and exchange ideas.”
This same philosophy carries over into Tillman’s community activities. The former high school teacher, who holds a degree in mathematics from Georgia State University and a Master of Science degree from the Georgia Institute of Technology, remains a strong advocate for education. She chairs the North Carolina Business Committee for Education, is a member of the Board of Trustees of the University of North Carolina – Wilmington, and co-chair of the Charlotte-Mecklenburg Communities in Schools.
A native of Atlanta, she is also active in Charlotte community affairs.
“Charlotte is a wonderful community,” she says. “The people are warm and open, and welcomed me wholeheartedly. They took time to answer my questions, assimilating me into the infrastructure of the community.”
Jim Palermo, executive vice president of Bank of America, was chairman of Charlotte Center City Partners (CCCP) when he first met Tillman.
“I immediately saw that Krista is energetic, competitive and skilled at getting things done,” said Palermo. “She has tremendous leadership skills and passion for things she believes in. I knew she could be a tremendous asset to Charlotte Center City Partners and was delighted to help shorten the networking cycle for her.”
Today, Tillman serves as Chair of CCCP as well as a member of the board of the North Carolina Blumenthal Performing Arts Center.
“A city or region is like a wagon wheel,” she says. “There must be a strong hub or core. If you have a strong central core, including both business and residential growth, then the city as a whole will be strong. And with a strong city, a region will prosper. I’m excited about what is already being done to build that strong central city and I look forward to helping build on those accomplishments.”
Tillman recognizes that accomplishing all her goals, both for BellSouth and for Charlotte, will be challenging. But she is not looking for an overnight victory.
“I want to make some progress – however small – every day,” she says. “That’s important. That’s also what makes challenges fun.”