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AT&T will dial up regional marketing forces as it prepares to compete head-on with the Baby Bells providing local phone service.

The long-distance giant is creating five regional offices called LSOs (local services organizations) to manage and market AT&T's entry into local service, to be operational Jan. 1.

The LSOs will have autonomy over marketing decisions, giving them the flexibility to counter the Bells' pricing and promotional plans in each region. That's likely to open up new-business opportunities for AT&T's five core agencies and a host of regional shops.

"The AT&T brand is extremely important and we wouldn't want to produce any conflicting messages," said Scott Etzler, an AT&T regional VP based in Chicago. "However, when you get into regional marketing, every region is different, so each office will have the power to tap the resources they need."

In addition to using AT&T core agencies such as FCB/Leber Katz Partners, New York, and Bronner Slosberg Humphrey, Boston, for advertising, Mr. Etzler's office already works with the Bravo Group, Uniworld and YAR Communications, all New York, to reach Chicago's ethnically diverse areas.

"AT&T's core agencies should be seeing its entry into local service as a huge red flag," said Jeffrey Kagan, president of Atlanta-based Telecommunications Associates. That flag will also draw the attention of AT&T's other core shops: N.W. Ayer & Partners, Young & Rubicam, and McCann-Erickson Worldwide, all New York.

"At this point we don't plan to let go of any core agencies," an AT&T spokesman said. "If anything, we'll be spending more money on advertising." AT&T currently spends more than $1 billion annually, according to Competitive Media Reporting.

McCann just last Friday won another estimated $20 million chunk of business, for AT&T Solutions.

AT&T last week was certified to offer local service in Chicago, adding it to Grand Rapids, Mich.; Rochester, N.Y.; and others. Federal telecommunications legislation allowing local and long-distance providers entry into each other's markets is still pending in Congress.

"The battle to get into each other's markets," said Brian Adamik, senior consultant with Boston-based Yankee Group, "is going to be a lot more fierce than long-distance wars we've been seeing with AT&T and MCI."

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