Now is the time to snap up networking deals

Analysts are advising Australian IT managers to renegotiate network service provider (NSP) contracts as prices continue to fall as a result of bankruptcy, mergers and tough market conditions.

Enterprises that have not renegotiated prices for 12 to 18 months should do so now, analyst firm Gartner said, as local network infrastructure operators and Web server hosting companies such as Telstra, Optus, Equant and AAPT, struggle to maintain a presence in a market that faces hardship until 2004.

Geoff Johnson, Gartner research director Asia-Pacific, said enterprises should act quickly to take advantage of the opportunities current market conditions offer.

"It is likely that more consolidation will occur, more NSPs will file for bankruptcy and healthier NSPs will grow by acquiring distressed assets at bargain prices," he said.

"Because today's rates are lower than what enterprises are paying under current contracts enterprises should lower minimum annual commitments to protect themselves and reintroduce NSP diversity."

According to Johnson, they should negotiate "out" clauses to protect the enterprise if the NSP can no longer provide adequate services.

To ensure business continuity at a time when NSPs are exiting the market, Gartner said enterprises should not align with just one provider.

"The days are gone when enterprises could look to a single provide for all their voice and data network services; but don't panic, assess what actions are needed to reduce risks."

Enterprises without multiple NSP strategies and backup plans face higher risks and have fewer options for action than do those who have already prepared contingency plans.

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