KPN Chooses Lucent as Prime Integrator for All IP Network Transformation Project

On August 28th KPN named Lucent as its prime integrator for the deployment and integration of its All IP Next Generation Network (NGN), based on IP Multimedia Subsystem (IMS). Lucent is responsible for the migration of KPN’s existing services and customers to the new All IP network to meet KPN’s announced marketing objectives.

Recommended Competitive Responses

► Local telecommunications services competitors to KPN (e.g., Tele2/Versatel, Scarlet Telecom and Priority Telecom) need to continue targeting customers with the message that they are more flexible and responsive than the incumbent.

► Pan-European competitors (i.e., BT and Orange Business Services), for their part, should underscore their own NGN plans and ability to offer seamless cross-border services across a wider footprint than KPN.

► Competitors should also highlight that while KPN’s plans are ambitious, the operator’s NGN strategy is far from complete. They should point out that KPN has not concretely detailed any new products to the market. At the same time, the projected cost-savings of EUR 850 million is a long way out and not guaranteed.

► Carriers should also consider the BT method, wherein the carrier itself took the prime integrator role, giving vendors smaller domains in which to do technology-specific system integration. This approach can work for very large incumbents with well established technology organisations, and with the requisite project management skills.

Recommended End User/Customer Responses

► Large corporate customers should begin discussions with KPN over how its NGN plans will improve actual services. This should focus on issues dealing with IP, as well as fixed to mobile convergence. While KPN is still a long way out, customers can still initiate this dialogue.

Security Market Shakeup: IBM Buys ISS

On August 23rd IBM and Internet Security Systems (ISS) announced the two companies have entered into a definitive agreement for IBM to acquire ISS, a publicly held company based in Atlanta, Ga., in an all-cash transaction at a price of approximately $1.3 billion. This acquisition advances IBM's strategy to utilize IT services, software and consulting expertise to automate labor-based processes into standardized, software-based services that help clients optimize and transform their businesses.

Recommended Competitive Responses

► Carriers that compete in the managed security space such as AT&T, Verizon Business and SAVVIS need to continue to differentiate their security services by showcasing their ability to offer proactive security services by leveraging global network ownership, providing ‘eyes’ into potential network threats before they reach clients.

► All competitors need to maintain their vendor agnostic support for software and hardware, showcasing this as a differentiator to IBM and ISS services that are likely to show favoritism to in-house products such as ISS’ Proventia product line and IBM’s Tivoli software.

► Security providers in the market, such as Symantec, Counterpane, Cybertrust and VeriSign need to promote themselves as a core security focused provider, leveraging all in-house expertise, technology and services to focus solely on providing the best protection to a clients business.

► All competitors need to look at potential new pricing strategies, as IBM has the ability to leverage an extensive financial services arm to make its products and services more readily available to a massive audience; however, it also has the reputation for carrying a larger price tag that could be used as a strong selling point by competitors.

Recommended End User/Customer Responses

► Customers of both IBM and ISS should be please with this news as it brings new resources that will be leveraged to offer greater protection of a client’s security infrastructure, while also offering additional flexibility of service options to clients.

► Customers will want to ensure they have a roadmap of IBM’s growth strategy of its security services, as it is too early to determine exactly where the company will be focusing its combined efforts and resources, but it is also necessary for clients to know if the company is taking its services in the direction that meets their needs.

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Verizon Adds IP-based Service Features to Its Contact Center Product Suite

On August 22nd Verizon Business announced IP Tollfree and IP IVR services, plus new IP Trunking options to its Contact Center Services suite. IP Tollfree enables contact center agents to manage calls using SIP-based VoIP. IP IVR provides interactive voice response to process incoming calls and route them either via circuit-switched voice or VoIP. Both new features are certified as compatible with Avaya Communication Manager SES 3.1 software, and Verizon has added support for Avaya Communication Manager to its IP Trunking service.

Recommended Competitive Responses

► AT&T can emphasize its VoiceTone capabilities, which use AT&T’s Dialogue Automation technology that can recognize customer intent based on the caller’s own words rather than forcing them to listen to a list of potential responses that may or may not adequately represent the caller’s need.

► Qwest can emphasize that it has been offering IP-based call center services in its markets for several years, and Verizon is not really offering anything new or different from what it has been doing all along.

► Sprint can point to its IP/MPLS network and extensive experience in developing and deploying enterprise IP solutions. The carrier in August 2006 rolled out its own hosted contact center solution, which operates across its SprintLink IP network.

Recommended End User/Customer Responses

► Small and medium sized enterprises that are evaluating call center solutions, but are not sure how much call volume horsepower they need and for how long, should definitely look at Verizon Web Center. Verizon has implemented features that enable smaller companies on limited budgets to create a cost-effective contact center solution that will accommodate existing TDM and IP platforms.

► Large enterprises that are considering a migration from TDM to IP will want to investigate Verizon’s services and gain an understanding of the carrier’s roadmap for future development. Verizon’s IP trunking can accommodate up to 1,000 seats and now offers support for Avaya, both of which make the carrier a contender for hooking IP-enabled call centers that enterprises already use into its network, or at least offering a potential migration path from TDM to IP.

► Customers looking at IP trunking solutions to connect their call centers should definitely also investigate what AT&T can offer. AT&T has certified IP telephony interfaces using PBXs from not just Avaya but Alcatel, Nortel, Siemens, and others, and the carrier has more sophisticated contact center capabilities brewing in its labs for its VoiceTone hosted call center service.

PAETEC and US LEC Bow to the Consolidation Trend, Building a Billion Dollar CLEC

On August 14th PAETEC and US LEC announced their intent to merge, creating a new public company with $1 billion annual revenue, $187 million EBITDA, and $109 million free cash flow. The combined carrier will have 45,000 business customers and a presence in 52 of the top 100 MSAs.

Recommended Competitive Responses

► Competitors that are financially stable can point at the “New PAETEC” with its $751 million in aggregate debt and suggest that it is a CLEC in trouble before it has even left the start gate.

► Competitors can play up the potential for uncertainty in the wake of a merger or acquisition. US LEC customers may be particularly vulnerable to a message that their regional CLEC is being merged with some national entity based not in the southeastern U.S. but in upstate NY.

► Large incumbent carriers can describe the “New PAETEC” as having a fragmented and patchwork presence.

Recommended End User/Customer Responses

► US LEC and PAETEC customers should not be overly concerned with the planned merger between the two carriers. The “New PAETEC” plans only to realize $25 million in “synergies” out of a billion-dollar revenue budget in the first year, and $40 million annually thereafter. In other words, the merger is about growth and expansion, not layoffs and reductions.

► Customers looking to use services that cross the PAETEC and US LEC portfolios and/or networks should go with one carrier or the other for now, or sign contracts with each separately. The merger as planned will not take place until some time in Q4 2006, and additional time will need to pass before the two CLECs will begin to have their services integrated in any fashion.

► Customers of US LEC and PAETEC that like their CLEC but don't have quite the right mix of services or footprint can shop between the two for now, and see which carrier can provide a superior package.

► Even after the merger, US LEC and PAETEC will not have a comprehensive nationwide footprint, or a direct international presence.

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