AT&T WorldNet is slowly but surely laying the foundation that should make the company more competitive in the Internet service provider arena.
In the past six months, AT&T WorldNet has been actively filling gaps in its current business services in an attempt to make existing users happy and to keep up with competitors. While AT&T WorldNet has been focused on staying with the pack, the company is also turning its attention to the future in the form of new IP voice services.
The ISP is looking to utilize TCG CERFnet to offer new, innovative services, including an integrated voice and Internet traffic package. CERFnet is part of the Teleport Communications Group (TCG), which AT&T earlier this year announced it would acquire (NW, Jan. 12, page 1).
AT&T WorldNet is getting focused, says Rebecca Wetzel, director of Internet services at TeleChoice, Inc., a Verona, N.J.-based consulting firm. While AT&T WorldNet may not have been the first with many of its past offerings, it now is "coming out with well thought through services and [it] seems to be delivering on [its] promises," Wetzel says.
Although the future looks bright for AT&T WorldNet, the ISP still needs to patch some holes in its product line before it can move forward. As a step in this direction, at the recent ComNet '98 show the company announced a Managed Firewall Service that uses Check Point Software Techno-logies, Ltd. Check Point FireWall-1 servers.
Managed Firewalls
The Managed Firewall Service is available only to WorldNet Managed Internet Service customers for $2,500 per month, per site. AT&T plans to make the Managed Firewall Service available to its WorldNet Virtual Private Network (VPN) service customers later this year.Managed firewall services are essential to AT&T's product portfolio, but the ISP is one of the last service providers to market, behind GTE Internetworking, Sprint Corp. and MCI Communications Corp.
AT&T WorldNet also lagged behind in the VPN race. AT&T WorldNet first announced its VPN service toward the end of 1997 (NW, Nov. 3, 1997, page 1), well behind ANS Communications, PSINet, Inc. and Concentric Networks, Inc., which were first to market with VPN offerings.
But analysts believe AT&T's late arrival will not hinder the success of the service or the company, and for the first time in recent history, there is< evidence that AT&T may no longer be resting on its laurels.
For example, late last month the ISP introduced AT&T WorldNet Voice. This limited market trial with AT&T WorldNet consumer customers is small in scope, but big in concept.
"AT&T WorldNet, of all the ISPs, should be doing voice trials, especially since AT&T is a voice service provider," Wetzel says. The ISP division is smart not to hold back to see what the other ISPs will do in the voice arena, she says. AT&T WorldNet is taking a leadership position in the IP voice market, Wetzel adds.
AT&T needs to show the marketplace that it's not afraid to go after IP voice, especially since other new carriers such as Qwest Communications Corp. and Level 3 Communications, Inc. have already started investing in IP voice networks, Wetzel says.
While voice over IP is seen as a "free" service in some circles, many others see it as a way for carriers to get around local access charges, says Dan Taylor, senior analyst at Aberdeen Group, Inc., a Boston-based consulting firm.
Long-distance carriers pay as much as 45% of their revenue in local access charges, Taylor explains. "IP voice gives them a way of offering local services and avoiding access charges," he says.
According to Taylor, of all the service providers, AT&T should be the company to offer customers telephone rates of less than 10 cents per minute. "In 1996, long-distance service revenues for AT&T totaled $39 billion, MCI $16 billion and Sprint $8 billion," he says. Of the three, AT&T should find economies of scale within its organization to offer lower rates, he says.
The CERFnet plan
Now that AT&T WorldNet has its Internet service foundation in place, analysts believe it hasthe strength to build a solid, resourceful business. This is especially true because the company will
be getting additional Internet know-how from TCG CERFnet once the merger with TCG be-comes final.
TCG has used CERFnet to develop new services, in addition to integrating its Internet access services with its existing voice and data offerings. Now AT&T WorldNet will have the opportunity to leverage TCG to build new services such as data and voice integration and robust intranet offerings.
The question of how innovative AT&T WorldNet will be has a lot to do with how it will integrate TCG CERFnet into its existing business, Taylor says.
While AT&T WorldNet was catching up with the other large national ISPs, TCG CERFnet was rolling out innovative services that let business customers use a single T-1 for voice and Internet access services, he says.
AT&T is just starting to show its acceptance of such new and different services, even though those services might cut into the company's voice or private line revenues, Taylor says.
While AT&T recognizes that there is a possibility it could lose money in one area of business, it believes strong revenues will come from its business IP services.
In fact, International Data Corp., of Framingham, Mass., is predicting that large-business customers will generate $218 million in revenue for all ISPs based solely on standard dedicated Internet access services by the end of this year. That number is expected to rise to $759 million by the year 2000.
AT&T WorldNet is not willing to let those potential revenues go to competitors, and certainly not without a fight.
