WorldCom Inc. attempted to deflect concerns about lagging voice revenue Wednesday, as company executives laid out plans for new revenue streams from managed networks services and offerings based on IP (Internet Protocol) and 3G mobile services.
European executives, addressing a crowd here a day before the CeBit trade show starts, announced GPRS services for the third quarter as well as Web Center managed network service for the fourth quarter in Europe.
The officials confirmed a commitment to Internet Protocol (IP) networks to help customers to streamline voice and data services and cut related costs.
WorldCom made the first layoffs in its company history earlier this month, as it suffered a fate similar to many of its telecommunications peers, with voice services dragging down results. In February, the company reported fourth quarter earnings of US$1 billion, down from US$1.6 billion a year earlier. The drag in WorldCom earnings came from its voice businesses, with voice revenue from business customers down 7 percent. Long-distance voice services to consumers, took a hit in quarterly revenue of nearly a half-billion dollars, reporting $3.8 billion compared with the $4.2 billion reported for the same period last year.
The once-prized revenue for voice over the PSTN (public switched telephone network) continues to dwindle as more and more customers tap IP-based services, WorldCom officials said here.
WorldCom is looking to evolve from its PSTN-based voice business in the coming years, delivering its whole range of services over IP and adding new services as 3G (third generation) mobile networks and VoIP (voice over IP) infrastructure is implemented.
"The future is not voice versus data versus the Internet, but the Internet, the Internet, the Internet," said Liam Strong, senior vice president of WorldCom EMEA, in an interview.
However, while the company hopes to make the IP transition as quickly as possible, it concedes the process will take some work.
"Voice is going to be with us for a long time," Strong said. "We are not going to see voice decline, it is just that other segments will grow much faster. We have seen this trend coming for some time and look for future efficiency gains with IP to keep us in a strong position."
WorldCom laid out several major areas where it expects strong growth over the next few years. Not surprisingly, it hopes to bolster its UUNet Technologies Inc. division by signing up more customers to the unit, which offers Internet backbone services. UUNet will offer the core IP network for many of the company's other initiatives. UUnet's backbone services will be coupled with corporate-class managed network services gained through WorldCom's acquisition of Digex inc., closed earlier this year.
With this foundation in place, the vendor can pursue its major goal of delivering revenue-generating value added services such as improved network security features, redundancy tools and customized hosting. These three components make up the core of WorldCom's Web Center service plan, where customers can monitor and manage their networks over a browser.
"We want to take care of the installed base we have in the market right now," said Thierry Bosser, vice president of products and marketing for WorldCom EMEA (Europe, Middle East, Asia), during the news conference Wednesday. "Those customers are not going to change to IP over night. We want them to change at their pace."
WorldCom expects some clients -- like those running automated teller machines for banks -- to need a few years before switching their entire networks over to IP. For the early adopters, however, WorldCom will launch its first Web Center service in Europe by the fourth quarter, according to Bosser. He did not specify a rollout timeframe for the US.
WorldCom executives also reiterated the company's focus on designing services for new wireless networks. In keeping with these goals, WorldCom will start beta testing in the second quarter its GRX (GPRS roaming exchange) system. GRX could make it easier for wireless networks using different technologies and maintained by different providers to exchange information. WorldCom sees this information swapping as key if vendors want to deliver highly tailored services to users.
By the middle of this year, WorldCom will start rolling out mobile services for GPRS networks, including mobile commerce hosting and platforms for ASPs (application service providers) to deliver wireless services. Then in the late stages of 2002, the company plans to make similar strides with UMTS (Universal Mobile Telecommunications System), officials here said.
WorldCom, in Jackson, Mississippi, can be reached at +1-601-360-8600 or http://www.wcom.com/