STRENGTH IN NUMBERS

By MICHAEL KRANTZ

For nine months they met secretly in airport conference rooms from Washington to New York City, imagining a mutual future that might never arrive. "We tried not to jump up and down or giggle," says an executive of the moment when they realized their infatuation would be made legit. "It took tremendous personal restraint."

The suitors were Raymond Smith and Ivan Seidenberg, CEOs of telephone gargantuans Bell Atlantic and NYNEX. Their moment came in February as they watched Bill Clinton sign the Telecommunications Act of 1996, which paved the way for last week's $22 billion merger of Bell Atlantic and NYNEX. The new company, to be called Bell Atlantic, will have revenues of nearly $27 billion, second only to those of AT&T in the business, and will offer a wealth of data services to about 36 million East Coast customers--some 22% of all U.S. subscribers.

The deal, which comes just weeks after the $17 billion-merger announcement of Pacific Telesis and SBC Communications (ne Southwestern Bell), confirms that the Baby Bells have hit their Terrible Teens. Now, 12 years after the Federal Government broke up Ma Bell, deregulation and the digital era have transformed the info-delivery business. Cable companies will offer phone service, the Bells will pump Stallone flicks down your phone lines and satellite moguls will do battle from the air.

It's anybody's ball game, but the bigger you are, the easier the game is to play--especially if you're a telco needing vast capital to upgrade your network to compete with data-rich cable lines that are already connected to many homes. Says Ken Zita, managing partner of Network Dynamics, a New York City-based telephone specialist: "I see a future where no more than five or six giant phone companies will dominate the landscape."

Is this good news for anyone other than, say, five or six giant phone companies? "The world will be a much simpler place for consumers," argues NYNEX's Seidenberg, "with more choices, more services and more products united under a single roof and unified brand." Seidenberg says phone bills should deflate as the companies merge their billing and cut their labor costs; thousands of jobs will be downsized in the Bell Atlantic/NYNEX upsizing.

Such hymns to synergy grate on the loose coalition of consumer advocates, labor and industry groups fighting the merger. "The industry is moving in the exact opposite direction of competition," fumes Bradley Stillman of the Consumer Federation of America. He may not be factoring in the World Wide Web, the information network that links computers and perhaps eventually phones and televisions. Bell Atlantic, says Smith, will offer Internet access and Web-based software even as it fights for long-distance, cellular and wireless turf. "This is not going to be a fight over plain old telephones," he vows. "We're going to battle for the Web crowd."

So will MCI, AT&T, TCI, Time Warner and countless others. Bewildering? Sure, but also very competitive. He who offers the best service at the lowest price will win 21st century Americans' hearts and monthly subscription fees.

--By Michael Krantz. Reported by Thomas McCarroll/New York

With reporting by Thomas McCarroll/New York