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3/30/2007
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Feds Picks AT&T, Qwest, and Verizon Telecom Upgrade Worth As Much As $48 Billion

New managed services and wireless services will help agencies cut costs

The federal government awarded a massive telecom contract, valued at as much as $48 billion, to AT&T, Qwest Communications, and Verizon Business that will provide the latest voice, data, video, and security services, as well as government-wide wireless services for the first time.

Under the Networx Universal contract, the government's wireless and landline infrastructures will be upgraded, and agencies will have access to more managed services, including storage, collaboration, hosting, and contact center capabilities.

New managed services are a significant addition, says Warren Suss, of Suss Consulting, as are wireless services, which agencies previously had to buy themselves. "Not only are they paying too much for these services, but they don't have the benefits of centralized management," Suss says.

About 15% of the federal IT budget goes to network-related products and services, Suss says, and that could increase if more is spent on managed services.

The three contract winners (Sprint Nextel was shut out) now compete for the federal business. "It's the most strategic and largest contract that the government will purchase telecom through," says Don Herring, an AT&T senior VP.

The last large federal telecom pact was a $5 billion deal awarded in 1999 to Sprint and MCI WorldCom under which agencies upgraded to IP-based systems.

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