InformationWeek
Defining The Business Value Of Technology
February 21, 2000
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AT&T's Solutions group, for example, is targeting companies with overextended IT staffs with a series of services that manage disparate internal E-mail systems, LAN internetworks, and servers, as well as offering consulting on network migration and security issues. First-generation managed services covered only WAN pipes and attached routers and access equipment.
MCI WorldCom executives also see outsourcing as a growth market. The company acquired SHL Systemhouse Inc. in 1995, but sold it last year. "They didn't have enough scale to go after the customers we wanted and they specialized in network-integration services," says Tony Russo, senior VP of MCI WorldCom's global solutions group, which was formed last year to handle MCI's increasing outsourcing clients, now numbering more than 375.
Many of those customers look toward outsourcing services to help them with global networking. Each of the carriers has struck various global partnerships during the past decade. Recently, though, they've made big investments in that area.
AT&T adopted a two-pronged approach: It bought IBM Global Network for $5 billion last month, and teamed with Great Britain's BT to form Concert. The IBM network boasts 1,300 dial-up points of presence and dedicated access from more than 850 cities in 59 countries. Concert operates a high-speed IP network in 21 cities in 17 countries, and a frame relay network in 170 cities in 47 countries.
MCI WorldCom is intent on expanding its global network. Before its merger with MCI, WorldCom already owned international network assets, including a 2,000-route-mile European backbone, transoceanic cables connecting Europe to North America, and a network of satellite stations. Since the merger, MCI WorldCom has more than tripled the size of its European network.
Executives at both carriers see global services as a huge growth market. "Our network needed to be much more global," AT&T's Roscitt says. "Anyone who calls themselves a supercarrier has to have strong global resources."
MCI WorldCom says its core strategy is to own door-to-door network facilities for domestic and international traffic, rather than relying on other telephone companies to provide pieces of the links.
"This approach is compelling because when you control the network end to end, you can offer cheaper, higher-quality services with better service-level agreements, and control the pace of new technology deployment," Sidgmore says. "It's hard to hold our feet to the fire when multiple parties are involved."
Global networking has been, and can still be, a nightmare for IT managers who must deal with multiple bills in as many denominations, troubleshooting problems, regulatory issues, long installation times, and lack of service features, says Daniel Briere, president of TeleChoice, a consulting firm. "The situation is improving, but it's going to take a while still."
On the home front, the carriers are grappling with two important growth areas: wireless and last-mile access.
AT&T plunged into the wireless market in late 1994 when it bought McCaw Cellular Communications. It's now about a month away from launching a public tracking stock covering its wireless assets, which analysts estimate could fetch the carrier $100 billion. AT&T views wireless as a huge growth market and is investing in it because of the explosion of wireless voice and anticipated use of wireless to download Web data and conduct Internet transactions. In December, AT&T pledged to spend up to $4 billion to expand the reach, increase the capacity, and improve the quality of its wireless network.
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Illustration by William Rieser
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