Jump in the ring.

• Author: Speizer, Irwin
• Position: Concord Telephone Co.'s bid for deregulation

Little Concord Telephone is inviting the big boys over to tangle. But it's betting they'll be too busy to bother.

They call themselves the two percenters, local telephone companies that got to keep their turf protected under deregulation. They took their name from how they qualified: Each has less than 2% of U.S. local phone revenues. North Carolina has 12 such companies. And they're watching from ringside as the heavyweights in the major markets slug it out with new contenders. They're content to sit this one out as long as they can.

All of them, that is, except one.

Concord Telephone Co., headquartered 20 miles northeast of Charlotte, is leaping into the fray by - get this - volunteering for competition. Last November, it petitioned the state Utilities Commission to open the three-county territory it has had to itself for 84 years. The commission gave its OK in late May.

It's a gamble for a 100-year-old family-controlled company that has done quite well, thank you, as a regulated monopoly. Parent CT Communications raised revenues from $28 million a decade ago to $67 million last year. Its profit doubled, from $5.3 million to $10.5 million. Most has come from Concord Telephone, the seventh largest of the state's 16 local-exchange companies. Phone lines in its 700-square-mile territory, covering most of Cabarrus and Stanly counties and southwestern Rowan, went from 70,000 to 100,000.

Why risk that for the uncertainty of the free market?

Ask the man taking Concord Telephone headlong into deregulation. Michael R. Coltrane, the quiet, pug-nosed 50-year-old great-grandson of the company's founder, is president and CEO of CT Communications. The way he sees it, waiting just postpones the inevitable. Sooner or later, those protective walls are coming down. This way, he can meet deregulation on his terms. "It's going to happen anyway," he says. "If you learn to compete early, keep costs in line, take care of customers, you'll do fine."

Sounds simple. But Coltrane is betting big that his company is run well enough to fight off competitors and that his intricate strategy for dealing with deregulation works. If it does, CT Communications stands to make a lot of money. That's because deregulation gives it something it craves: more flexibility in setting its rates and no restrictions on how much it can earn.

It won't get free reign. The Utilities Commission had to sign off on its new prices, future increases are limited by the inflation rate, and the new residential rates are frozen for three years. Still, Concord Telephone will no longer have to base prices on its rate of return and can sidestep the lengthy approval process to raise them. It can lower them as much as it wants.

Of course, that freedom matters little if the company gets crushed by a swifter or more powerful competitor. And there's a bruiser right next door in Charlotte. That's the North Carolina base of Atlanta-headquartered BellSouth, the biggest local-access provider in the state with 2.3 million lines.

Concord Telephone has one thing in its favor: time to get in shape before it has to do battle. Its market, most of it rural, should stay below the radar while new competitors line up to take a shot at BellSouth in Charlotte, Raleigh and Greensboro. "It's like Willie Sutton said: That's where the money is," Coltrane says.

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