Special to the American Banker

One Valley Bank of Charleston, W.Va., is testing a telecommunications service from Bell Atlantic Corp. designed to reduce costs and provide better management of voice and data transmissions.

The service, known as a "virtual private network," gives the bank a customized telephone network - with such features as speed dialing and special routing capabilities - at a lower cost than dedicated lines or equipment.

"Deregulation of the telecommunications industry has led the bank to take a hard look at its existing telecommunications architecture, and this trial is part of the process," said Brian Fox, senior vice president at One Valley, the lead bank of $4.2 billion-asset One Valley Bancorp.

The network being tested at about 20 branches "will offer us clear cost- cutting opportunities. We expect savings of $50,000 to $75,000 a year," Mr. Fox said.

Mentis Corp., based in Durham, N.C., estimates that banks spent $828 million on local calls, compared with $1.68 billion on long distance service last year.

Bell Atlantic is one of the first regional bell operating companies to offer a virtual private network service; long distance carriers have sold the service for years. Regional companies' entrance into the business brings the networks' cost benefits to local calls.

Virtual private networks help reduce costs by consolidating telecommunications traffic so that businesses can take advantage of volume discounts, said Richard Milliron, marketing manager for financial services at Bell Atlantic.

He said virtual private networks can help banks give their branches a common set of telephone features and service, regardless of the carrier or equipment used in the offices.

Bell Atlantic's service offers a number of feature enhancements, including a dialing plan that lets branches be dialed as extensions, and a call-accounting function that lets a company keep track of calls to particular clients by tagging those calls with account codes.

Through remote access, employees can use the network while out of the office, letting them make business calls at business rates regardless of the call's origination point.

The service also lets the bank block calls to certain telephone numbers or regions and allows remote callers on the network to bill calls to their business phones.

As a result of the Telecommunications Act of 1996, which in part allows local and long distance carriers to get into each other's businesses, Bell Atlantic plans to extend its virtual private network service to long distance calls.

Regulatory approval for such services is expected next year, Bell Atlantic officials said.

One Valley also is working with Bell Atlantic to test video conferencing.

Ms. Tucker is a freelance writer based in Hazlet, N.J.

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