* Goals for Qwest's Government Services Division
In this week’s issue of the ISP News Report, we provide the second half of our recent discussion with Diana Gowen, Qwest’s new senior vice president of government services sales.
In May, Gowen took over the reins at Qwest’s Government Services Division, which is in the midst of bidding on the 10-year, $20 billion Networx program. Networx, the largest telecom services bid in the world, will provide legacy and leading-edge voice, data and video services to all U.S. federal agencies. Every major U.S. telecom carrier – AT&T, MCI, Sprint, Qwest and Verizon – is planning to bid on it. Read more about Networx here: http://www.networkworld.com/news/2005/032805-contract.html?rl
Networx is split into two parts: Universal, which encompasses a full suite of 37 telecom services ranging from older frame-relay to cutting-edge IP VPNs; and Enterprise, which is geared toward niche IP and wireless services. In a bold move, Qwest is planning to bid on both pieces.
Here are excerpts from my conversation with Gowen about Qwest’s strategy for the Networx procurement, its plans in the federal market and why the federal market is key to the ISP’s overall success:
Q. What do you see as the big differences between bidding on Networx and FTS 2001, the Networx precursor contract?
A. The scope of the services in Networx is broader. The requirements in reporting, billing and provisioning are more stringent than in 2001. Many of the things that over time evolved as features on FTS 2001 have become requirements on Networx. The portal is a good example. [Service-level agreements] are tougher. In fact, the SLAs were almost sleepers on FTS 2001. This time the government has spent a lot of time and paid attention to SLAs.
Q. Is there more price pressure on Networx than FTS 2001?
A. In FTS 2001, the evaluation criteria was not dissimilar to this one in that you had technical and management ratings, but price was equal or more important than all the other things put together. It’s the same thing with Networx. You have to write a very good, compliant proposal but then you better work on making sure that your cost structure is low because you’re going to have to get down to very competitive rates. In FTS 2001, the significant difference was that the government was mostly a voice buyer. When you look at FTS 2001, it was 60% to 40% split for voice and data. But it flipped three or four years ago. Now it’s mostly data. For the FTS 2001 players, the big margins were on the data side. Now everybody’s going to have cost pressure and price pressure in data, where the margins are today.
Q. Why is winning Networx a high priority for Qwest?
A. It’s a big buy. It’s a 10-year buy. There is a lot of upside for a company like Qwest because we’re not one of the legacy carriers. And, we have certainly been successful in growing our government business, and I expect to continue to be successful there.
Q. How big of a problem is it for Qwest if you don’t win?
A. I really don’t think that’s going to happen. However, should that happen, we have an FTS 2001 crossover contract that extends until 2009, which is a longer-term buying vehicle than the rest of the carriers have. One of the strategies that Qwest has had that has been very successful is to partner with systems integrators instead of competing against them. We will continue to do that. Should the worst of all worlds happen and we don’t win either a Universal or Enterprise bid, we will continue to partner with the systems integrator community.
Q. Besides winning Networx, what other goals do you have for Qwest Government Services Division?
A. Building civilian agency business is one of the principal areas of emphasis. Obviously, we’re interested in keeping our business at Treasury. The Department of Homeland Security has to be one that you have to target because it’s the biggest federal agency after the Department of Defense.
Q. How was Qwest’s position in the federal market affected by the fact that Qwest wasn’t successful at acquiring MCI?
A. It wasn’t. It would have been nice to have even more geographic reach than we have today. Certainly, an MCI merger would have provided that. But we still have a very modern, robust, nationwide network. We have a robust network in the 14 states where we are an ILEC. It doesn’t really affect our ability to bid and win Universal or Enterprise on Networx.
Q. What trends do you see in the federal telecom market right now?
A. There is more interest – I didn’t say more buying – but more interest in VoIP. So all of us are exposing our customer base to our VoIP offerings. The big dilemma for most of our federal customers is: Do I buy the equipment or do I buy a service from somebody? Buyers are asking: How do I put this together? And is it really prime time yet? Those willing to dip their toes in are doing trials.
There’s a lot of interest in security, but it doesn’t seem like the federal government has been successful in allocating the funding they need for purchases. So I think the big task for all of us is to figure out how to get them into newer technology that saves them money over what they’re doing now so they can afford to put the security layer on top.
