Local telephone giant SBC Communications Thursday announced a deal to become a sales agent for the venerable international data carrier Infonet.
Under the deal, SBC will receive a sales commission for all Infonet products and services it sells. Infonet expects to see $1 billion in incremental sales revenue during the five-year agreement with SBC.
The deal solidifies SBC's package of services it can offer multinational corporations. Infonet offers frame relay, ATM, IP virtual private network and other services with access points in as many as 180 countries. The company made its mark as an X.25 carrier to international points in the 1970s and 1980s, and boasts a customer-service infrastructure of in-country local support in 70 countries.
Along with rival international carrier Equant, Infonet has also emphasized the continuity of its operations while flashier global alliances led by major U.S. long-distance carriers have left users guessing and grumbling while they play musical chairs.
The deal fills in a hole for Infonet, too, says Yankee Group President Berge Ayvazian. Minority equity shares or partnership agreements in Infonet have been held at various times by MCI, AT&T and the AT&T-led WorldPartners alliance. But Infonet recently has no strong U.S. indirect sales channel, especially now that AT&T has all but abandoned the WorldPartners concept in favor of a close tie with British Telecommunications. SBC owns Bell operating companies Ameritech, Pacific Bell and Southwestern Bell, plus Connecticut's dominant carrier, Southern New England Telephone.
Though Thursday's deal does not involve either company taking an equity stake in the other, Ayvazian says SBC may eventually take a minority ownership position in Infonet. An outright purchase is less likely because Infonet shares are held by a number of other foreign carriers that are dominant in their home markets.
The success of this deal faces two potential hurdles, Ayvazian notes. First, neither SBC nor Infonet is considered a significant Internet player, even though Infonet recently introduced some Web hosting and security services. SBC says it will "collaborate with Infonet in its development and marketing of new data products and services," and yet another SBC partner - domestic U.S. wholesale provider Williams - is expected to contribute broadband transport and switching to any Internet-related effort.
Second, major U.S. long-distance carriers in the past have often objected to just this sort of agency relationship. They have argued - often successfully in court - that regional Bell operating companies such as SBC have no right to sell their customers any kind of long-distance service, even indirectly, until the U.S. government approves their long-distance entry.
But Ayvazian notes that recently MCI WorldCom and Sprint have backed away from anti-RBOC political moves, even supporting RBOCs' long-distance aspirations as a justification for their own merger. In addition, SBC recently applied for long-distance authority in Texas, with a decision due from the Federal Communications Commission in April, and RBOCs do have the right to carry purely international traffic if they want. An AT&T spokesman says the company will study the SBC-Infonet deal before deciding whether to challenge it.
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