Qwest wins voice, data contract with Walgreens

DEERFIELD, ILL. - If Qwest isn't the first carrier you think of when it comes to frame relay and old-fashioned circuit-switched voice, it may be time to reassess your assumptions.

The new national carrier made its most recent sale of surprisingly traditional network services last week when it bagged Walgreens, the nation's largest drugstore chain, in a $9 million contract. The principal loser in the deal: MCI WorldCom.

In the past, Walgreens has split its data-network traffic at least three ways - among AT&T and MCI WorldCom frame relay networks, and a separate satellite network. Now Qwest will provide frame relay connections to 465 stores, replacing the MCI portion of the network and extending frame relay to some new sites, according to Pete Szabo, a Qwest senior applications engineer. The AT&T and satellite data nets will remain in place, he says. Walgreens officials did not comment, but an MCI WorldCom spokesman confirmed the loss.

On the voice side, Qwest scored even bigger. The carrier will provide Qwest VNS - a traditional circuit-switched virtual private network (VPN) in which intracompany calls travel over a national net - to all 2,700 of Walgreens' stores, distribution centers, district offices and affiliated locations.

The Qwest frame relay network will carry point-of-sale applications, such as credit card verification, plus other traffic. The frame network itself will be quite conventional, with groups of 40 stores each using basic 56K bit/sec frame relay ports connecting to a 512K bit/sec port at one of Walgreens' data centers.

Qwest officials say they were able to offer Walgreens an especially attractive deal because they combined voice and data traffic on a single contract. Without giving exact numbers, Qwest confirmed the price Walgreens will enjoy is substantially below Qwest's official $190 per month 56K frame relay price. Even the $190 figure undercuts frame relay prices from AT&T, MCI WorldCom and Sprint (NW, Dec. 14, 1998, page 1).

Publicly, Qwest has promoted its broadband IP capabilities, including a voice-over-IP service. And Qwest officials say Walgreens and other new Qwest customers like the option of eventually migrating to these IP services, even though the services are not yet fully defined.

Yet behind the scenes, Qwest has carefully laid a plan to capture initial enterprise network business using more traditional technologies. CEO Joe Nacchio has acknowledged many large enterprise networks are likely to migrate slowly to full-featured IP VPNs, and he has called Qwest's traditional telecom offers a process of "feeding the quacking ducks."

Mack Greene, Qwest's vice president of voice and data product management, says more such deals are in the pipeline. "I'm carrying a big bag of duck feed," he quips.