A telecom shootout
- By Paula Shaki Trimble
- Dec 03, 2000
Telecommunications carriers' latest efforts to begin offering Internet-based
data services could threaten territory typically dominated by systems integrators,
according to a telecom analyst.
Carriers such as WorldCom Inc., Sprint and AT&T traditionally have
ended their service at the demarcation line of a building's walls. Integrators
then pick up there by integrating those telecom services with voice and
data applications inside the buildings, bringing the services all the way
to the desktop.
However, falling profits from residential long-distance
service have prompted the three major long-distance carriers to go after
Wall Street investments by shifting and splitting off separate business
lines devoted to areas of high growth, such as data centers, Web hosting
and other Internet services.
"What's happened is that the real gravy, the real value-added [business]
is moving to the other side of the [demarcation line]," said Warren Suss,
president of Suss Consulting Inc., a consulting firm specializing in the
federal technology market. "I see this movement toward e-business, Web [and]
data centers putting them on a collision course with the integrators, and
I'm not sure who's going to win."
Carriers say the business moves will speed development of new technologies
and improve service to customers, including those at government agencies.
The latest change occurred at Sprint. The company launched an electronic
solutions business unit last month, which joins Sprint Internet Services
with Sprint Enterprise Network Services, the company's consulting arm. Called
Sprint e-Solutions, the unit will offer business and government customers
end-to-end solutions that bundle transport, co-located hosting, virtual
private networks (VPNs), applications management and database management,
said Mike Ligas, director of business development for Sprint's government
The inclusion of Sprint's Enterprise Network Services group in the
e-Solutions business enables the company to offer its consulting services
to design and integrate networks, he said. Sprint has 2,300 e-Solutions
"We're typically known as a transport provider to the wide-area network,"
Ligas said. "This extends that from managed services beyond the WAN to the
WorldCom's realignment into two separate business lines offers a similar
model to that of Sprint. Both provide telecommunications circuits and services
to all federal agencies under the $1.5 billion FTS 2001 contract.
As a result of the realignment at WorldCom, the company is investing
resources in Web centers, said Ron McMurtrie, vice president of business
product marketing at WorldCom. Web centers are multimedia customer-care
centers that go beyond call centers to include Web chats and e-mail, he
said. WorldCom also plans to expand into global VPNs, which McMurtrie expects
will be attractive to government customers.
AT&T, which recently created a family of four companies, had the
biggest problem because its whole end-to-end strategy was at risk, Suss
said. Separating the companies will enable AT&T to respond to customer
demand with new services more quickly, said C. Michael Armstrong, AT&T's
chairman and chief executive officer. AT&T will create new consumer
offerings around its residential long-distance and WorldNet Internet access
businesses, such as Digital Subscriber Line broadband services.
Mary Bradshaw, president
of the MultiMedia Telecommunications Association, a subsidiary of the Telecommunications
Industry Association, said integrators should not worry about losing business.
The high level of integration needed to marry legacy networks to new Internet-based
networks will keep integrators busy, she said.