Above: a Frye Regional Medical Center technican transmits
heart images from the Hickory hospital to another medical center.

Taking it to the bank: many businesses learn
it's a sure thing to invest in telecom equipment

By Lisa H. Towle

East Carolina Bank's name jumped out when Gov. Jim Hunt announced the list of banks partnering to contribute $30 million to a state-managed fund that will make angel investments in growing businesses in rural counties, particularly those in high-tech fields. Among the investors in the N.C. Rural Economic Opportunity Fund, which will in turn leverage $100 million in federal aid, was First Union ($10 million), Bank of America, BB&T and Wachovia ($5 million each), First Citizens ($1.5 million) and East Carolina Bank at $500,000 – no small sum for an institution with just 16 branches.

The community bank in Engelhard in Hyde County is putting its own money into growing the economy in rural North Carolina because a growing rural economy will rebound to its profitable benefit. You invest, you get a return. You also need to be ready to capitalize on the growth by running your business most efficiently. Which is why East Carolina Bank also is investing its money in computers and telecommunications networks.

Its 160 employees communicate by personal computers connected over a wide area network or WAN. Bank customers manage their accounts on-line and can view digital images of their processed checks. Monthly statements are more user-friendly and can instantly display and print enlarged images of checks.

ECB employees soon will be able to use the bank's Internet site to receive training, read operations manuals and review policies and procedures. In the planning is video conferencing to reduce managers' travel time to and from meetings.

The conversion of ECB's telecommunications system thus was a strategic as well as a practical move. If you're a $250 million bank whose customers mostly are small businesses, you do everything you can to increase your market share.

ECB's Gary Adams, senior vice president and chief financial officer, and Ed Heflin, vice president and director of management information systems, were charged with building a customized and cost efficient telecom system. Moving from strategy to reality was no small task. The blitzkrieg of products and pricing packages triggered by the deregulation of the telecommunications industry has left both private and commercial consumers feeling somewhat disconnected.

After considering another vendor, ECB elected to contract with Sprint, its local phone service provider. “This was a big project that needed a lot of coordination,” says Adams. “When you're in a remote location such as we are and you don't necessarily have a lot of resources, you have to carefully choose your partners. It was helpful that Sprint already knew where our technology plan was headed.”

Like the state's other major local service providers, BellSouth and Verizon, Sprint has beefed-up its traditional offerings with a portfolio of products designed to address the lucrative networked systems market.

For instance, in Lee County, Sprint is putting the finishing touches on a telecommunications project for the county's school system. The $1.7 million modernization is part of a strategy developed by the school system's technology director. It incorporates voice, data and video capabilities connecting 12 schools serving 9,000 students. Every classroom features multiple computers, each with Internet access, as well as a printer and phone. The schools' paging and bell systems, as well as the clocks, are linked to a central computer. And the equipment for the airing of educational videos also allows for live broadcasts to each class from the principal's office.

In Hickory, itself a hotbed of growth in the telecommunications industry, Frye Regional Medical Center and Catawba Memorial Hospital are using technology to save lives. The hospitals are linked by a 100-megabit point-to-point that allows doctors to share information and arrive at the best diagnosis for cardiac care patients.

Such strong technological underpinnings mean employees can enjoy the now-standard benefits of instant access — there more advanced phone system has a “message notification” feature where pagers instantly receive voicemail messages. Frye Memorial's internal network includes a “survivable fiber ring” — if a cable is cut, traffic is automatically rerouted so there's no loss of calls or data.

In addition, Matt Mulligan, administrative director of information systems for Frye, notes, “Being able to transmit images digitally is desirable for several reasons. There's the savings. Before, pictures of the heart always involved film and developing costs. But even more important, we're able to help more patients by making quicker diagnoses.”

Service providers are able to offer such comprehensive communications systems because, in part, they've entered strategic partnerships and vendor relationships with equipment manufacturers such as Nortel (phones and switches, for example), Cisco Systems (routers), Lucent (switches), Alcatel (optical fiber) and Corning (cable).

It was these types of connections — the ability to “one-stop shop” — that ECB was looking for. Although it had begun exploring the possibility of overhauling its telecommunications system several years ago, it couldn't justify the costs until the spring of 1999 when, says Heflin, changes in tariffs changed the picture.

“The tariffs Sprint had to quote us on ISDN service, frame relays, and other types of voice and data transports, was more than we could justify at the time,” he says. “It wasn't their fault; it was a FCC thing. We were shooting for monthly telecommunications expenses in the $12,000 ballpark, but instead were getting quotes that would have put us in the $15,000 to $16,000 a month range.

“Periodically, though, the government does change tariffs, and that's what happened in our case. The tariffs came down on a variety of things, Sprint was able to adjust the pricing, and we were able to move ahead.”

It was then that a proposal was taken to senior management. A deal was signed that summer and conversion began last fall. And ECB's cost? A manageable $12,684 per month.

Rarely, however, is the road to progress completely smooth. In this case, hurricane-induced flooding of the eastern part of the state as well as preparations to combat the Y2K millennium bug temporarily drained resources.

And, concedes Adams, there was at one point a need to regroup. Engineers and technicians from Sprint and Cisco, which was providing the routers to move the voice and data traffic (including all information from automatic teller machines), met to re-examine the challenges connected with networking over the far-flung distances between the bank's corporate office and branches. The plan and equipment were tweaked.

The payoff has come with the economies of time and money. Increased bandwidth makes the retrieval and processing of data by staff “tremendously fast,” says Heflin. The voicemail system includes an automatic paging feature. And now that they're part of a network, the cost of separate long distance calls from branch to branch has been replaced with a flat rate over a contracted period.

Also, ECB was paying $50,000 a year for an 800 number. The company wanted to know if Sprint, as part of the telecom overhaul, could make that go away.

Sprint did. Now, for instance, the Xpress Phone Banking service allows customers to access their accounts by telephone 24 hours a day, seven days a week using local access numbers. Calls come in over the bank's WAN, so they're treated as an internal, four-digit extension and automatically routed to the voice response system.

“All in all, we've got a top-notch network in place, one that's already helped in many facets of our business,” says Heflin. Currently, total annual costs associated with that network are $152,000. The expenditures have come very close to the original estimates. If there were extra expenses, explains Adams, “it has usually been because of changes we elected to make along the way.”

He adds: “The bottom line is, since the installation of the network and upgrades to the phone system, we've increased our operating expenses by approximately three percent a year. But that increase is offset by the benefits of a wide area voice and data network.”

COPYRIGHTED MATERIAL. This article first appeared in the October 2000 issue of the North Carolina magazine.

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