AT&T Details Domestic Local Integration and Global Network Expansion Plans for 2006

On February 20th AT&T detailed its plans to spend between $8-8.5 billion in capital investment during 2006. During 2006, AT&T intends to: extend its MPLS IP services, integrate 1,000 ATM/frame relay nodes from the former SBC into AT&T’s network, add additional network interconnections and access points, double its DSL country coverage, triple its Ethernet country connectivity, and enhance its satellite, WiFi, and wireless access services.

Recommended Competitive Responses

► Verizon Business can counter AT&T's marketing message of a unified, automated network and cohesive services with messaging such as greater network choice, or a deeper reach, and show off its customer network management toolsets against AT&T's BusinessDirect tool.

► Verizon Business should also get out the message that it is moving quickly to integrate its global network fabric with Verizon's local presence.

► All domestic U.S. competitors can emphasize that dealing with AT&T to purchase long haul services may be a somewhat slow and painful engagement process for any but large enterprise customers.

Recommended End User/Customer Responses

► Large enterprises should have AT&T and Verizon among their top list of potential carriers when they shop around for products and services. Regardless of whether or not AT&T's expansion plans bring direct benefit, for example services in international locations where the customer needs them, it's still important for a customer to see what AT&T can do for them if for no other reason than an expectations baseline for competing carrier bids.

► Multinational enterprises should satisfy themselves that AT&T can maintain robust SLAs across its network-to-network interconnect agreements, and make sure AT&T's in-country SLA guarantees are as consistent as its service portfolio plans are.

Integra Acquires Electric Lightwave from Citizens

On February 7th Integra Telecom, a provider of local, long-distance, and Internet services for small and mid-size businesses, signed an agreement to purchase Electric Lightwave, Inc. (ELI). Under the terms of the agreement, Integra will purchase ELI, including its assets and customers, from Citizens Communications.

Recommended Competitive Responses

► Incumbent local exchange carriers in the regions covered by the Integra-ELI match up, such as Qwest and AT&T (SBC), should look for any signs of discontent caused by the usual merger related confusion, and act quickly to target the larger customers of either company with special win-back incentives.

► Other CLECs and other small competitors should point out to customers that bigger is not always better, and the inevitable pains of consolidation of people and networks could cause customer service to slip or account teams to become disconnected from customers.

Recommended End User/Customer Responses

► Potential customers of Integra services should closely compare the speeds, feeds, and prices for access and transport options with competing carriers, including the RBOCs and national CLECs that have operations in the same metro areas, to see if Integra can now offer better deals following the link up with ELI.

► Existing customers have until Q3 2006 to evaluate whether the merger will improve, or lower the quality of services and prices offered by Integra. In the meantime, existing customers that might be impacted by the merger should refrain from signing long term contracts until after the deal has closed and the dust has settled.

AOL Brings a Stronger Business Sense to Its AIM Service

On February 21st AOL and WebEx Communications announced that they have teamed to create a secure version of the popular AIM service for businesses and at-work instant messaging users. Codenamed “AIM Pro,” the new service will deliver additional security as well as the unparalleled voice, video, and Web collaboration capabilities of the global WebEx MediaTone Network.

Recommended Competitive Responses

► IBM should promote its recent announcement offering its customers the ability to chat with instant messaging (IM) users from America Online, Yahoo!, and Google. Universal service has been a key milestone for interoperability among messaging platforms and the advent of these major players working together could mean greater opportunities for those that can build on unique features.

► All messaging providers must ensure their platforms are compatible with the needs of the business users in addition to the consumer market, as the adoption of IM for corporate environments continues to grow. This means that messaging players must include features that are unique to business users including conferencing, sales product demos, and secure chat.

Recommended End User/Customer Responses

► Customers will want to inquire about the enhanced security services included with the collaboration of the two companies and the leveraging of the global WebEx MediaTone Network.

► Customers will also want to perform due diligence and inquire about the numerous other Enterprise IM (EIM) solutions in the market and the ability to interact with customers, clients, and contacts utilizing other IM platforms.

Verizon Business Picks Up Where MCI VoIP Left Off, Adding Low-end IP-based Integrated Access to the Mix

On February 9th Verizon Business announced four new enhancements to its suite of IP telephony services for business and government customers, including IP Flexible T-1, which gives branch offices of 24 users or less an IP-based T1 with dynamically-allocated bandwidth; CPE support for Polycom IP Phones; integration of Dedicated Toll-Free services with VoIP; and Sheriff anti-fraud notification for Managed IP PBX service.

Recommended Competitive Responses

► Competitors can spin most of these new enhancements as much ado about nothing, just new twists on old technology (such as integrating toll-free with VoIP) or overdue releases of long-promised CPE support (i.e., Polycom IP phones).

► Competitors can point out that though Verizon Business developed the IP Flexible T-1, it is Verizon Communications, which handles small business customers, that sells it. History has shown that the “not invented here” syndrome can be tough to overcome within organizations.

► Competitors can point out that Verizon Business has not made any progress over the last six months since MCI promised to add more vendor support for its Managed IP PBX service. Currently, that service still only supports Cisco CallManager, with no further word on when to expect support for other vendors.

Recommended End User/Customer Responses

► Customers in Verizon territory should re-evaluate their bandwidth requirements. Those offices that need a T1 or less of bandwidth should check with their Verizon Communications sales representative about picking up or switching over to an IP Flexible T-1 service, and inquire about any introductory promotions or bundling discounts available.

► Customers at various stages of migration to VoIP should definitely check out Verizon Business’ portfolio. The carrier offers something for all sizes of business customer, and what it sometimes lacks in depth of services and support regarding premises-based VoIP gear, it makes up for in range of services and feature set.

► Larger business customers interested in Managed IP PBX service should demand a timeline from Verizon Business as to when it will add vendor support for more IP PBX vendors, and they ought to look to AT&T as a subject matter expert in supporting VoIP across multiple PBX lines, but one that has been light on the network-hosted VoIP services side.

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