VSNL Launches Global Ethernet Solution

On June 9th VSNL launched its global Ethernet solutions over SONET/SDH and MPLS, which will connect 120 cities in India and major cities across North America, Europe and Asia. This move is perceived as a strong initiative by VSNL to enter the global enterprise market and go head-to-head with carriers such as BT and AT&T.

Recommended Competitive Responses

► Reliance and Bharti need to work on a counter strategy to VSNL’s Ethernet solution launch. They do not have a counter proposition to VSNL’s global Ethernet solution as their proposition is limited to MAN and domestic WAN deployments.

► International carriers in Europe and North America should educate their sales teams on how to counter VSNL’s sales team in their respective regional markets. Also, they should point out to enterprise customers that the incumbent carriers are best placed to facilitate local support in Europe and North America.

► Reliance should consider rolling out its own global Ethernet solution. Given that it has extensive coverage through FLAG and capacities on consortium cables, it has the most competitive (amongst Indian carriers) reach to compete with VSNL.

► Bharti Airtel has limited coverage in the global market and its partnership with Singtel is also rather limited. Therefore, it needs to make a decision whether it will compete in the global enterprise fixed-line market; if yes, it needs to look beyond its partnership with SingTel and look towards extending its network.

Recommended End User/Customer Responses

► BPO and IT/ITeS customers should give a favorable ear to VSNL’s global Ethernet solutions for data traffic. They should evaluate Global Ethernet over MPLS as a replacement to their existing ATM or IP VPN networks as a more cost-effective and better performing connectivity solution.

► Banks and financial services firms should evaluate VSNL’s Ethernet Private Line solution on security and resiliency for the nationwide and global deployments. This is because they require secure and high capacity links for their core banking functions.

► Foreign MNCs setting up an operational base in India should partner with VSNL for its Ethernet solutions as it is the only Indian carrier offering such solutions, has six Ethernet PoPs in India and has the widest global coverage that an Indian carrier can offer. However, they should evaluate the SLAs offered and deployment of security policies on the network.

► Indian enterprise customers that are using Ethernet solutions should ask VSNL for trial service and evaluate the network performance vis-à-vis their existing service provider. Also, they should check on the existing customer support and operational flexibility and evaluate it with VSNL’s offering.

Telenor to Launch Second Generation Broadband

On June 9th Telenor launched its ADSL2+ based broadband services. Customers in both the consumer and business markets will be offered up to 16 Mbps broadband speeds from Telenor. Telenor also launches a Mini/extended coverage product, which will give even more people access to broadband.

Recommended Competitive Responses

► Shared ADSL access still retains the problems of guaranteeing QoS. Competitors can look to deploy WAN Ethernet access services for SMEs in metropolitan areas. This can provide much higher access speeds while keeping costs down.

► The bar has now been raised in the Norwegian DSL market and competitors need to push for unbundling as soon as possible. Fast unbundling will allow competitors to launch competing content services almost as fast as Telenor.

KPN Merges Wholesale Voice Business with iBasis

On June 21st KPN and iBasis signed a definitive agreement to merge the KPN international voice business with iBasis. The move will allow the national carrier to gain access to the iBasis global VoIP network comprised of over 1,000 POPs in 100 countries as well as interconnects to 400+ carriers.

Recommended Competitive Responses

► Large network operators should continue to play to their strengths: coverage, strategic partnerships in secondary markets and their range of online network management and monitoring capabilities for ensuring VoIP quality. They should also stress the benefits of having greater control across the network (end-to-end) and stronger back office support.

► All competitors in a customer facing situation should take aim at the KPN / iBasis assertion of being a ‘top-five’ global carrier. They should point out that this figure measures both TDM and VoIP traffic and appears to leave out Global Crossing in its ranking system.

► Arbinet should stress that it is truly carrier-neutral, and that it has 400+ partners and good scale by trading over 1 billion voice minutes per month.

► Interoute should continue to emphasise the cost-savings involved when using the Arena platform compared to a traditional TDM-based environment.

Recommended End User/Customer Responses

► Wholesale customers should consider the KPN / iBasis link up as a positive development. The two companies have a strong complementary footprint which will be important for supporting trans-Atlantic voice requirements between the US and Europe. They should also take note of some of the developments happening in Asia and should shortlist KPN as a potential partner in the region.

► Carriers and service providers, where relevant, should consider wholesale trading exchanges to provide coverage along secondary routes and in remote regions. They should also consider using such services for evaluating pricing and quality metrics against internal figures. This will be important for ensuring end customers get the best price-quality metrics. It might also help to improve margins in the short-term.

Swisscom Re-aligns Fixed and Mobile Divisions to Support Convergence

On June 16th Swisscom announced that it will re-align its three divisions (i.e., Swisscom Mobile, Swisscom Fixnet and Swisscom Solutions) to provide fixed and mobile services for each customer segment. Swisscom Mobile will take over responsibility for the residential market; Swisscom Fixnet for the SME and Swisscom Solutions for the corporate market.

Recommended Competitive Responses

► European competitors with fixed and mobile operations should consider similar approaches to that undertaken by Swisscom for re-aligning their respective divisions. On the one hand, taking a customer segment approach could be a more practical solution than full integration, which can be very lengthy and expensive to complete. On the other, continuing to maintain the traditional arms-distance relationship shows little signs of working in Europe. Carriers need to make the necessary organisational changes in order to support converged product offerings in Europe.

► Against Swisscom, sunrise should also stress that it has a roadmap for offering dual GSM WiFi/VoIP handsets to support business customers. The company should begin to communicate the advantages of its new dual-phone (e.g., no internal communication costs and reduced international roaming charges).

Recommended End User/Customer Responses

► Swisscom customers should not expect any significant changes to happen overnight. Corporate customers might also consider using the state of transition as an opportunity to renegotiate existing contracts where there could be some overlap between the fixed and mobile account management teams.

► Business customers should consider Swisscom’s innovative five-in-one PC card product which provides a range of access technologies (i.e., HSDPA, UMTS, EDGE, GPRS and WLAN) to provide broadband coverage to 99.8% of Switzerland.

► Business customers considering sunrise’s dual-phone service should be aware that the service will not be available until autumn 2006. They should also get the following information: the number of simultaneous calls the hub can handle, maximum range within WLAN hub, the availability of end-to-end QoS and PBX-like features (e.g., short number dialing). While the dual phone offers a lot of promise to the Swiss market, there are still a number of issues to resolve to make it a business class service.

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