Telecom mergers: As industry deals continue, questions arise

The spate of recent telecom deals means that all of the top-tier providers are in some stage of flux, which creates a situation that offers opportunity and risk for corporate network managers.

Here are some general tips from analysts who track the industry:

• Customers of the top-tier service providers should stick with their carriers during the acquisition, says David Rohde, a senior analyst at TechCaliber. The reason that Equant, Infonet Services, AT&T and possibly MCI are being acquired is for their enterprise customers. The new owner wants your account, Rohde says. "In general, you should not leave your current carrier even if it is being bought," Rohde says. "In the past, that wasn't always true. But it seems to be true now."

• If your contract is up for renewal, issue a competitive bid. Don't be surprised if both companies in these pending merger deals submit a bid. "If I were a network manager looking at a bid from SBC and another one from AT&T, I'd certainly play one off the other anyways, but I'd do so more aggressively right now," says Brian Van Dussen, director of telecom strategies at The Yankee Group.

• Try to renegotiate even if your contract is not up for renewal, because by next year your leverage will be diminished, analysts say. "If there's any leeway to renegotiate, now is the time to do it," says Melanie Posey, research director of the telecom market at IDC. Posey says that service providers such as AT&T that are being acquired want to bring current contracts to the new parent company. "Presumably, AT&T would be more willing to make sure that they bring the maximum number of customers to SBC," she says.

• Don't move all your traffic to one of the RBOCs, experts say. All the RBOCs have national strategies, but those strategies are up in the air now that SBC is buying AT&T. Instead of building out their own national networks, the RBOCs appear to be buying infrastructures from others. RBOC enterprise customers might have to transition their services to other networks if deals such as the SBC purchase of AT&T and a possible Qwest or Verizon purchase of MCI come to fruition.

• If you have global needs, consider Infonet or Equant, Rohde says. The new owners of these providers - British Telecom and France Telecom, respectively - are committed to global expansion. In contrast, AT&T might not be as committed to building out its global IP infrastructure with an RBOC as its owner. The same fate might befall MCI. So Rohde advises network managers with global locations to take a look at Infonet and Equant.

• Smaller providers such as Broadwing or Global Crossing might have a tougher time competing against newly formed behemoths such as SBC/AT&T. "With these carriers you want as little commitment as possible," Rohde says. "They're really the ones that are most disadvantaged by all of this [merger] activity."

• Keep your eye on the details of how the merger will be executed. If your carrier has been acquired, you want to get as much information as possible about how and when your traffic will be moved to the new parent company's network. "You need to ask about the timetable for migrating that traffic and how long the parallel networks are going to be in operation," Posey says. "You need assurances that the traffic migration is going to be handled in some kind of systematic way and with fail-over built into the system."