BellSouth, Commerce One To Create New Co.

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February 23, 2000 (1:26 PM EST)

By Elisabeth Goodridge,

BellSouth and Commerce One on Wednesday disclosed plans to jointly develop a business-to-business online marketplace for the telecommunications industry.

The new company, yet to be named, will be independent from BellSouth and Commerce One, though both companies will maintain minority stakes in the venture. The founding companies plan to establish the marketplace for all players in the telecom industry. Each member, buyer, or seller will earn equity in the new company based on its level of activity on the exchange, which is scheduled to launch in the second quarter.

In recent weeks, dozens of companies have been involved with forming online marketplaces, as businesses look to them as a way to slash procurement costs. Commerce One recently teamed up with General Motors to provide the technology for GM TradeXchange, an online trading exchange for the automotive industry.

"We believe the exchange will save BellSouth $1 billion over the next two to four years by streamlining purchasing, reducing operational costs, and enabling efficient procurement planning," said Pat Shannon, BellSouth Exchange Services president.

Jeane Schaaf, senior analyst at Forrester Research, said she believes the Commerce One-BellSouth venture will attract other telecommunications companies.

"The other telcos aren't far enough down the road in their own development," Schaff said. "By joining the this exchange, they avoid the round one, developing their own exchange, and round two, consolidation of exchanges. I do expect vendors and the other telcos to begin signing up in the near future."