Alltel's Empire


Many know Jacksonville, Florida-based ALLTEL Information Services for its widely used service bureau for handling mortgage servicing portfolios. But ALLTEL's value-added network is building business-tobusiness communications traffic, and its Internet Solutions unit is another growing piece of this modern technology company.

At first glance, ALLTEL corporation seems a little confusing. What's it trying to be, a telecommunications company or a software firm?

Although ALLTEL may appear a bit schizophrenic, the opposite is actually true. The Little Rock-based powerhouse has always had a clear vision of how telecommunications and computer technology were related fields with intrinsic synergy.

Think of it as the yin-and-yang approach to modern technology. The yin, or external rationale, for ALLTEL's strategy is that computer and communications infrastructures have become commingled. Data has to be transmitted, Jeffrey Fox, president of ALLTEL Information Services (AIS), says plainly and simply.

The yang approach is more internal. ALLTEL Information Services is the outsource provider for ALLTEL's communications divisions, which is its largest customer. "We manage all of their infrastructure data centers for networks, software development and production," says Fox. "We act for them as EDS would for some other company."

And then there's mortgage technology, which ALLTEL plays a dominant role in delivering, especially in servicing.

The strategy at ALLTEL has been convergence between telecommunication and information sources, adds James Milligan, president of ALLTEL's Residential Lending Solutions division, Jacksonville, Florida. "Most clients we deal with are large financial institutions, and we look at telecommunications and information services as being tightly intertwined. They blur into one another these days, particularly now with the Internet. Our strategy is to provide a capability to deliver telecom and information services on a wholesale basis to financial institutions."

The concept must be working, as ALLTEL Residential is probably the country's leading provider of automated mortgage banking "solutions": that is to say, software and computer services for loan origination, secondary marketing, Internet and servicing products. According to MORTECH 98, a study published by Washington, D.C.-based SSP/RES Research, ALLTEL services 41 percent of all outstanding mortgage loans.

"This is our core business," says Robert Lee, executive vice president of product management with ALLTEL's Residential Lending Solutions division. "We supply data processing for lenders for the servicing of mortgage loans. This is out of our Jacksonville data center." ALLTEL calls this work its remote processing product, or mortgage servicing product, but in the industry it's mostly known as the service bureau. It is by far the dominant player.

An ALLTEL executive estimates the outstanding volume of residential mortgage loans is around 50 million. ALLTEL handles more than 20 million of those loans on its system.

"We provide software and data processing capabilities for our customers," says Lee. "Essentially, for those customers using our mortgage servicing package on a servicebureau basis, they are running software on the hardware that we have here in our data center." Among its many customers are such mortgage industry players as Norwest, SunTrust, Cendant and FT Mortgage.

"The number of loans that our customers are adding to [the] system every year is growing," Lee says. "But the entire industry has been experiencing consolidation, and that has tended to decrease the number of customers."

Great leap forward

ALLTEL was originally a Little Rock-based rural telephone company, servicing small towns with a population of roughly 10,000. The industry was subsidized and profitable. By 1990, ALLTEL had grown into the third-largest independent telco. …

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