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Sprint and AT&T to do battle over enterprise services

Race for multinational integration projects

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Comment Sprint CEO Gary Forsee was bullish last week about the prospective merger of AT&T and BellSouth, claiming his company’s challenge to the Bell operators — based on broadband wireless, cable company alliances and mobile multimedia - would be equally strong against three RBOCs as four.

While the race for the mobile triple play will be critical in the medium term, in the immediate future the first battle between these two players, and Verizon, may well be in the enterprise space, where there is increasing interest in managed services and integration projects addressing corporate mobile applications.

Sprint has been a front runner in introducing service level agreements and consulting services to try to rival the traditional integrators such as IBM in the mobile enterprise market; but AT&T and, to a lesser extent, Verizon’s MCI unit, have the advantage of long established presence in the global business of providing network services to large companies.

Sprint has announced a new enterprise mobility unit to offer consulting and deployment support in the US, and is looking to expand internationally, while AT&T will increasingly work more closely with wireless arm Cingular in the large company space. This will be important to retain its lead over other converged wired/wireless integrators, notably Verizon and, in Europe, France Telecom/Orange/Equant, which could well become a major partner of Cingular too.

British Telecom is seeing more of its own successful enterprise services business coming from mobile projects and could well work more closely with Vodafone and even Vodafone partner Verizon in future as the race heats up to secure the multinational dollar in the coming few years, which are likely to see the largest growth yet in mobile enterprise deployments.

Sprint Nextel is being determinedly sanguine about the likely AT&T-BellSouth merger, which could strengthen those companies’ joint wireless venture, Cingular, and widen the gap it already has with Sprint’s cellular activities. It believes, with some justification, that its strategy is highly differentiated from that of the Bell operators and will meet their huge market spread with a more innovative, content driven approach, pivoting on the planned broadband wireless network, an advanced mobile triple play, and Sprint’s joint venture with four major cable operators.

This last gives it access to content and, assuming the alliance holds strong, a wireline platform to address the growing demand for common services over fixed and wireless networks. CEO Gary Forsee said Sprint would not be encumbered by local lines like the Bellcos (it is to sell its own local landline arm, Embarq, later this year) and would, through the cable venture, bring "a whole different paradigm of growth the RBOCs don't have".

This is a battle, though, that will be fought over the coming decade. More immediately, a strengthened AT&T will challenge Sprint in an area where it is targeting major growth in 2006-7, enterprise services.

Converged network services for enterprises

One of the key reasons for Bell operator SBC to buy AT&T last year – and subsequently take its name – was for the venerable operator’s recently upgraded global network and large number of enterprise customers in the US and internationally. Integrating Cingular’s nascent mobile enterprise service activities with AT&T could raise the wireless company’s profile significantly and allow the combined company to target wired/wireless projects – particularly large integration and managed services deals.

Although the largest cellcos are increasingly targeting consulting and integration contracts connected to mobile enterprise strategies, they have little track record here, and many large corporations are looking to turn to a common partner for all their networking needs, as they move to converge wired and wireless with IP.

This gives a major advantage to the wireline carriers that have well established enterprise integration arms, and can introduce wireless to their portfolios on a multinational basis – AT&T is a prime example, as are BT and France Telecom (the leaders in Europe) and to some extent, Verizon/MCI. Though MCI still works in the shadow of its previous financial problems, the Verizon ownership will help it challenge AT&T more effectively and there are already moves to add Verizon Wireless to the mix.

Now rebranded Verizon Business, it last month announced a new line of integrated services, including wireless and wired network access offerings, that will combine MCI's remote access platform with Verizon’s EV-DO cellular system. Key services are secure mobile back-up for times when companies' primary networks are disrupted, outsourcing, data and IP networking, voice over IP and IT services. The converged offering will be launched in the US but is also seen as a way forVerizon to extend its international business, based on MCI’s 75 offices around the world.

Verizon Business combines the enterprise and government customer base of MCI with Verizon's former Enterprise Solutions Group and claims 94 per cent of Fortune 500 companies as customers in some respect. In addition to traditional voice and data services, Verizon Business will offer enterprise customers managed WAN and LANS, VoIP services and telecom equipment.

"Finally Verizon is getting the wireless part of the business and the VPN part of the business talking to each other," Forrester Research analyst Lisa Pierce said. "This is behind what Sprint has been doing and even behind, to some extent, what Cingular has been doing."

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Next page: AT&T and Cingular

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