Carriers struggling over IP

Newly merged telco giants must face down integration and financial issues before they can tackle enterprise IP.

Like Godzilla preparing to storm Tokyo, the new AT&T (formed from SBC/AT&T merger), Sprint Nextel and Verizon (with MCI) will soon pursue corporate customers with a monster-sized vengeance. But from all appearances, advanced IP services, as critical as they ultimately will be, won't be part of their early attack plans.

Instead, the behemoths will first promise corporate users more integration packages, consulting options and managed services. They'll battle furiously on these fronts, intending to turn decent profits that will see them through the longer-term fight for IP dominance.

To continue reading, register here and become an Insider. You'll get free access to premium content from CIO, Computerworld, CSO, InfoWorld, and Network World. See more Insider content or sign in.

Like Godzilla preparing to storm Tokyo, the new AT&T (formed from SBC/AT&T merger), Sprint Nextel and Verizon (with MCI) will soon pursue corporate customers with a monster-sized vengeance. But from all appearances, advanced IP services, as critical as they ultimately will be, won't be part of their early attack plans.

Instead, the behemoths will first promise corporate users more integration packages, consulting options and managed services. They'll battle furiously on these fronts, intending to turn decent profits that will see them through the longer-term fight for IP dominance.

Experts don't expect carriers to make major corporate IP inroads until 2009. Many corporate IT executives are concerned with more practical matters. For instance, some say they just want to see familiar faces once the merger dust settles. Others say they hope customer service doesn't tank as the carriers become internally focused on merging assets.

"We are not worried about infrastructure support, just the continuity of people in various organizations. The backbone of each of the major carriers and their partners are more than sufficient to handle our requirements. We also believe that our choices for equipment and network services will not be impacted by the vendors' consolidation," says Tony Pizzelanti, vice president of IT at Anthony Sylvan Pools, a pool and spa company in Mayfield Village, Ohio.

Though not overly worried, IT officials stress that they don't want to be ignored. "I have not been approached by any of the major carriers in quite a while," says Anthony Maceroli, managing director of IT at Fitch Ratings, a New York issuer of ratings and opinions on major credit markets that uses Verizon services. "It seems Verizon is preoccupied with the integration of MCI. It hasn't been in marketing mode as far as I can tell," he says.

Ignoring existing customers and missing the chance to grab additional corporate accounts would be a mistake for any of the carriers, especially given their need to address "three main pain points," says Gary Rubinoff, managing partner at BCE Capital, a venture-capital firm in Toronto. "As the [incumbent local exchange carriers] face increasing competition and erosion of their legacy voice-revenue streams, they must focus on increasing cash flow, reducing capital expenditure and improving competitiveness. Service platforms generally address all three of the pain points," he says.

Each carrier's platform will bear its own stamp, says Lisa Pierce, a vice president of Forrester Research. For example, Sprint Nextel will try to exploit its wireless and wireline convergence, while the new AT&T will try to make the most of its expertise with MPLS and in network management, she says.

Reading Verizon's future direction is tougher, Pierce adds. "There will be a lot of picking and choosing in terms of the best services MCI has to offer," she says, noting that Verizon is unlikely to abandon its new iobi Enterprise voice and messaging services platform.