@Home, AT&T Deal Leads ISP Convergence

Convergence in the Internet market continues as companies this week sought to carve out a space in the highly competitive arena.

@Home had a busy week on the Internet consolidation front, as it announced last week its plans to buy Excite. And according to published reports, @Home may also buy AT&T's Internet-access business in a complex deal that would enable the long-distance telecommunications company to maintain much of its control over the business.

Neither AT&T nor @Home would comment on the possible deal.

In addition, as cable companies jump into the Internet fray, telephone companies argued last week that the Federal Communications Commission (FCC) should require the cable TV companies to open up their networks and submit to FCC regulation.

AT&T, cable operators, and Silicon Valley companies have been lobbying the FCC, arguing that regulation would deter investment and advancement of the Internet.

Meanwhile, independent ISPs, whose businesses are getting subsumed by the telephone company giants, argued last week that the FCC should wait to give large local phone companies the approval to expand their high-speed Internet-access businesses.

Analysts said that Internet consolidation is definitely a reality -- and a necessity.

"I expect to see one-stop shops for Internet access, telephony, and fax," said John Coons, an analyst at Dataquest, in San Jose, Californmia. "With networks consolidating, it makes sense for a small number of long distance providers to [consolidate] bandwidth -- a large number of small networks is not cost-effective."

Indeed, telephone companies and vendors are readying themselves this week at ComNet in Washington with services and products that leverage the broadband potential of these new networks. On Jan. 26, GTE Internetworking will launch its IP Telecom Services unit, rolling out IP Fax as its first series of services. IP Fax -- an incarnation of the DestinationFax service trials announced in March 1998 -- allows business customers to send and receive faxes from desktop applications, the Web, and fax machines. Users can also broadcast faxes and track the delivery status of their faxes from the desktop.

Meanwhile, 3Com will announce the availability of a telephony system for carriers that will provide both traditional circuit switching and combined voice and data over IP. The three-tier architecture consists of gateways, gatekeeper devices, and core switches interconnected using standard protocols.

3Com's new telephony system is designed to help service providers migrate from traditional infrastructures to IP, and will compete against systems under development by rivals Cisco and Lucent, according to a 3Com source.

Rob Guth, a Tokyo correspondent for the IDG News Service, contributed to this article.

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