COMPTEL Fall 2006: XO Completes Nationwide Network Upgrade

On October 9th XO announced that it had completed its next-generation nationwide inter-city fiber optic network, delivering 100 Gbps of capacity to 75 major U.S. metropolitan markets.

Competitive Positives

► XO’s announcement of an upgrade to 100 Gbps for its long-haul network, with the potential for future upgrades on links between city-pairs to 400 Gbps, positions the carrier to meet short-term (i.e., three to five years) and long-term wholesale requirements.

► Carriers that purchase wholesale services typically purchase services from multiple carriers for diversity to protect against network disruptions. XO is well-positioned to offer these customers a solution that will meet their needs for the next five years and beyond, giving XO the opportunity to move into position as the primary carrier if they perform well, as well as to win new business.

► XO can position itself as a stable provider with the ability to meet even the most demanding network requirements. Unlike its peers, XO is not in the midst of integrating other companies and network facilities into its own, nor is it under acquisition itself.

Competitive Concerns

► Most of XO’s fellow CLECs and IXCs have also begun upgrading their networks using the same optical technology that XO is using, thus making the benefits of rapid provisioning and upgrades something that will be expected rather than the exception.

► XO is now positioning itself to compete directly with carriers such as Level 3, which also provides much of its fiber and long-haul wavelength services. Competitors that were previously settled into the optical services market can point out that, until recently, XO was mainly selling to small to medium-sized businesses; therefore, it is not usually on the short list for large corporate RFPs.

AT&T to Acquire Managed Apps Player USi

On September 12th AT&T Inc. announced that its subsidiary AT&T Corp. will acquire USinternetworking (USi) for approximately $300 million in cash and assumed debt, in a deal expected to close by the end of 2006. AT&T will gain access to USi's hosted software and eBusiness management services and consulting teams.

Recommended Competitive Responses

► Competitors with managed application elements in their portfolio, such as NaviSite, will want to review their own competitive strategies carefully. This move means that the market will be more difficult for those companies looking to stand alone against global players that bring an array of products and services.

► IBM should carefully review this merger’s impact on its own offerings, but it should find that, with its Corio acquisition last year, it is well-positioned to continue to compete.

► Verizon Business took a step forward with its Totality acquisition from 2005, but it still does not have the range of offerings here that USi delivers.

► While this will further consolidate the crucible for companies offering solutions to global enterprises, there remains a broad swath of mid-market customers catered to by the likes of Salesforce.com and others that have a no-license fee option and easy entry for clients, without the high fees and other integration pain points.

Recommended End User/Customer Responses

► Current customers of USi will find the acquisition could be useful but daunting. AT&T brings a deep array of solutions, including managed hosting, and a global network that could prove synergistically useful, yet its size may be off-putting to clients that have come to expect white glove treatment from the smaller USi.

► Prospective managed applications clients should ensure that any contracts allow flexibility and make sure that client service requirements are well laid out, thus making certain there are no missed milestones when implementing a new app. In addition, they should make sure that any potential disruptions from the merger are compensated.

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AT&T Opens the Storage Vault for SMEs, Consumers

On September 27th AT&T announced two new storage solutions for its SME and consumer clients, extending AT&T's enterprise portfolio of online PC, laptop, and server backup solutions. The solutions being introduced include AT&T Online Vault Service for Consumer, and AT&T Remote Vault Service for Small Business.

Recommended Competitive Responses

► Managed storage vendors that include file archiving for consumer and SMB customers will need to take a close look at their pricing schemes. AT&T brings a very effectively priced solution that will peak user’s interest and the company has the marketing and sales bandwidth to make serious inroads unless competitors are prepared.

► iBackup can point out that its online backup services include interactive and automatic backup scheduling including transmission compression, incremental/full backups, encryption, synchronization, open file support for MS SQL Server and Exchange Backups, and more.

► Verizon should step up its marketing efforts now on its storage solutions, such as its “mystorageplace” service for consumers, playing up that it also supports Windows XP and 2000 OS versions as well as Windows 98 and ME.

► eVault can tout that it is one of the top providers of secure online backup and recovery services, offered since 1997, to more than 7,000 companies globally.

Recommended End User/Customer Responses

► For small and mid-sized businesses, the prospect of an automated backup solution coupled with a solid GUI interface for an administrator to review its employees’ storage practices is enticing. Clients will certainly want to include this solution from AT&T in their RFPs.

► Consumers will want to consider AT&T’s Online Vault if they are Windows users, especially if they are not committed daily backup activists. While there are other storage solutions for free or low monthly rates for consumers, AT&T brings a well-respected brand to the space and the processes that can reassure a wary client that needs a backup solution.

Fall VON 2006: Global Crossing Builds on Avaya Relationship to Launch VoIP Professional Services

On September 11th Global Crossing announced VoIP Professional Services in partnership with Avaya, building on the companies’ existing relationship. The service set includes technical services, TDM/IP transition management and managed services.

Competitive Positives

► Global Crossing’s Advanced Solutions Group is a relatively small component within the carrier, designed for network assessment and design, but not for lengthy, in-depth engagements and ongoing managed enterprise communications (i.e., IP-PBX) services. Avaya and other enterprise communications manufacturers are hungry to sell deployment and ongoing managed services alongside their equipment. It’s a natural fit for the two companies to pair their complementary services to provide a full set of VoIP Professional Services for customers.

► Global Crossing does have some managed services that complement Avaya’s managed enterprise communications services.

► Global Crossing’s deepening of its relationship with Avaya, both in collaborating with VoIP Professional Services and in having its sales force become a reseller of Avaya products and services, keeps building up credibility that the carrier is a qualified provider of enterprise-class VoIP services.

Competitive Concerns

► Competitors with large consulting and professional services organizations can position Global Crossing’s partnership with Avaya as born of necessity, describing Global Crossing’s professional resources organization as too small to go it alone in enterprise communications.

► Global Crossing has a presence worldwide, but the partnership is presently limited to North America.

► Though they would prefer to sell their own services, telecom service providers with big professional and managed services organizations can split the professional services and managed services load with Avaya, the same way that Global Crossing does with VoIP Professional Services.