As president and chief operating officer of Cincinnati Bell, Jack Cassidy generates a steady stream of revenue from his 127-year-old local phone business. Even when facing rivals, the unit of Broadwing Inc. (www.broadwing.com) wins: It captured a whopping 70% of the Cincinnati area’s consumer long-distance business just 18 months after entering the market, and the company’s recent foray into the wireless arena was similarly auspicious.

So why did Cassidy announce an overhaul of Cincinnati Bell (www.cincinnatibell.com) in early 2001?

He was in pursuit of nothing less than the Holy Grail of the telecom industry: He wanted to “bundle” all his services onto a single bill and be the sole provider of telecom services for his customers.

That required a complete reorganization of the business. While many companies talk about organizing themselves to meet customer needs, Cincinnati Bell had to actually do that, overthrowing the existing hierarchy and dealing with a host of messy details.

Many other companies had tried to bundle and failed. The biggest local monopolies—those formed by the court-ordered breakup of the old AT&T Corp.—have been stymied in their attempts to offer packages of services because they haven’t won regulatory clearance to offer long distance to all of their local phone customers. Other companies, ranging from giants such as AT&T (www.att.com) to tiny upstarts, have attempted to bundle services but have either found the work too expensive or have decided it’s just too complicated to be all things to all customers.

Still, Cincinnati Bell succeeded—and has been reaping the benefits by not only simplifying customers’ lives and making them happier but also creating opportunities to sell them more services through package deals tailored to their situations. Joe Gagan, senior analyst at research firm Yankee Group (www.yankeegroup.com), says, “Customers want to deal with one point of contact and get a decent price...and a high level of service.”

In 2001, the first full year of what the company refers to as “convergence,” parent company Broadwing reported that its Cincinnati-based businesses, which include all of the communications services sold in bundles to the local Cincinnati market but which are mostly Cincinnati Bell services, posted a 24% increase in Ebitda. Ebitda, which is earnings before interest, taxes, depreciation, and amortization, reached $518 million. Revenue rose 11% to $1.24 billion. Cincinnati Bell’s wireless “churn” rate, the number of customers who dropped their service each month, averaged 1.6% last year, compared with an industry average of 3%. Cincinnati Bell also won two J.D. Power & Associates awards for customer satisfaction, one for best local phone service provider and one for best residential long distance.

A report issued by Salomon Smith Barney Inc. (www.salomonsmithbarney.com) in 2001 said Cincinnati Bell “has the mentality of being an aggressive, proactive seller of services as opposed to an order-taking utility.” The report called the company “a model” for how other local phone companies should be run.

When he announced the overhaul, Cassidy recalls, “Everybody said to me, ‘Why would you change things?’”

But Cassidy says he saw lost opportunities everywhere. Before reorganizing the company, Cassidy felt it could eke out incremental gains but would never be able to grow “in a quantum method.” As long as Cincinnati Bell’s services were run as separate businesses, it wouldn’t be able to win price-cutting battles with nationwide carriers, which are already trying to pick off his recently acquired long-distance and wireless customers. “I knew I’d be dead in the water before too long,” Cassidy says.

When Cincinnati Bell launched its long-distance business a couple of years ago, Cassidy had had a vivid look at the problems created by the traditional organization. The company advertised a phone number that customers could call for more information on long distance, but most just called the number they found on their monthly phone bills. They wound up talking to customer-service reps who were trained solely to handle queries about local service. That meant the reps had to transfer calls to another call center. The same thing happened when the company began its wireless service.

A detailed study convinced Cassidy that reorganizing would both increase revenue and cut expenses, so he huddled with all his managers for three days to work through a plan. In a process that Cincinnati Bell calls convergence—more commonly known as “synchronization”—the company reorganized itself by starting with the needs of particular groups of customers and then working backward to see what the company should look like. Cassidy disbanded his product and service units and established divisions serving businesses and residential consumers.

That caused plenty of tension.

Heads of business units were stripped of their “general manager” and “president” titles, and some dropped as many as three levels in terms of titles, so Cassidy had to explain that many of them were, in fact, gaining responsibility. For example, a business unit head who was reassigned to running a key function of the new consumer business now has much more revenue responsibility.

In the wireless arena, Cincinnati Bell was gaining share quickly and executives worried that the sales force might get distracted, so they were excluded from direct involvement in the convergence process. As a result, though, “the sales force became anxious,” says Karl Weidner, who headed the wireless business and is now vice president of consumer sales. He adds that “at the end of the day, this was a natural transition.”

Ann Crable, head of call-center operations, needed to prepare her customer-service reps to handle phone calls about any or all services, rather than have to hand phone calls back and forth across corporate boundaries. “People are buying based on service as much as price,” says Rod Woodward, industry analyst for telecom services at Frost & Sullivan. So, he says, it’s not enough just to bundle all of a customer’s charges on a single bill; the company also has “to back it up in the call center” by having reps able to take any kind of question.

If convergence was to provide all the projected revenue growth, Crable also needed to train reps to sell big-ticket items such as wireless and high-speed Internet access to customers who called with a question or problem. Before the push to converge, the reps had been peddling add-on services such as voice mail and call waiting, but they had little experience in “cross-selling” to customers.

Dismantling the product units meant that all product development and management would be handled by one group, which would need to devise ways of interacting with the newly formed residential and business market segments. “That was certainly bumpy out of the gate,” says Mike Vanderwoude, who previously headed up the long-distance division and is now vice president of product development. It caused budget challenges, too. “We had to take numbers that were sliced one way and slice them another way. In the early going, it was a struggle.”

Even tougher, the change had to occur in an environment where lots of Cincinnati Bell’s employees feared they would lose their jobs—and where some did. Among other changes, the company reduced its number of call centers to 11 from 16.

The company brought in outside experts in the field of “change acceleration” to help people through the process. “You can’t have people drink from a firehose,” Cassidy says. “As much as I’d like to think that everybody could understand very quickly why we had to merge all these businesses together, nobody could.”

Change didn’t happen quickly. It has taken some time to move everyone’s thinking from a “product point of view” to talking in terms of “one company serving the customer,” says Don Daniels, vice president of consumer marketing.

But change did happen. “We’re finally starting to talk about things in the same way,” Daniels says. Not only did the call-center reps get retrained, but even linemen and repairmen—everyone but the operators who dispense directory listings—pitch products whenever they come into contact with customers.

Chip Burke, head of I/T in the new organization, drew the task of making sure the company’s computer systems could adapt to and keep up with this newly unified approach to customers. He said there was no system available in the market that would handle the problem. And he estimated that if there were such a system it would probably cost between $50 million and $100 million. “We were basically told to make it happen with the resources that we had already,” Burke said.

Before convergence, each business unit had its own computer system, its own Web site, its own I/T staff, and its own call center. Many parts of the business used different technology and incompatible software.

Without the money to build a system that would make all the company’s systems speak the same language, Burke used what Cassidy calls “spit and baling wire.” He deployed an automated process to pull information from all the different databases, translate it into a common form, and build an aggregate picture of each customer—what he was currently buying and what he might be willing to buy. For the smaller base of business customers, Burke had the same process done manually. To put all charges on a single bill, Burke had each of the existing billing systems send data to a central repository that now churns out all bills. It wasn’t pretty, but it worked.

In the process, Burke says, the company’s I/T budget actually declined.

At a time when the entire telecommunications sector is under pressure, Cincinnati Bell still faces its share of problems. Its parent, Broadwing, is struggling because, like many telecom companies, it took on a lot of debt to finance the laying of thousands of miles of fiber-optic cable. Although Broadwing’s “broadband” business is viewed as one of the healthiest in the industry, demand for the new capacity hasn’t materialized as fast as hoped.

Even in terms of Cincinnati Bell itself, Cassidy says that “I would not say that we are home by any stretch of the imagination in terms of where we have to go in a converged world.”

Still, Cincinnati Bell can do things that none of its competitors can yet match. The company can offer customers savings of $30 a month if they buy their telecom services in a package instead of separately. The company can get a leg up on long-distance and wireless competitors and rival Internet access providers by offering, for example, a $99.95 a month package that includes local phone service, long-distance and wireless service, and superfast Internet access.

“Why would I ever get into a fair fight?” Cassidy asks.

Kelley, a senior writer for Context, is waiting for her telecom company to either bundle services on one bill or offer to fill out her expenses for her.