Deutsche Telekom wins KPNQwest customers

Deutsche Telekom AG (DT) has signed contracts to provide data communication services to several former customers of KPNQwest NV, as the bankrupt Dutch-American IP carrier struggles to keep its network running.

Last week T-Systems International GmbH, the Frankfurt-based carrier and corporate communications service unit of DT, announced it had signed service provisioning contracts worth €7.5 million (US$7.2 million) with 15 former KPNQwest customers. Since then the German company has "added a few more," a spokesman for T-Systems said on Tuesday. "And we certainly hope to take on still more."

T-Systems has established a special task force to help former KPNQwest customers make the transition to the German company, the spokesman said.

As one of DT's four core business units, T-Systems provides IP transit connections for carriers and managed services, including Web site and application hosting and data storage, for corporate users. The company is also responsible for managing DT's global fiber optic network spanning more than 40 countries.

The unravelling of KPNQwest couldn't come at a better time for T-Systems, which has been scrambling to find new customers. The German company is competing for global accounts with several other large service providers, including AT&T Corp. WorldCom Inc. and Equant NV.

Still, T-Systems could have difficulty convincing former KPNQwest corporate customers -- already let down by the dire financial situation of one service provider -- to sign binding managed-network service contracts that typically commit them to three to five years of service, said Sandra O'Boyle, an analyst in the Amsterdam office of the Sterling, Virginia, consultancy Current Analysis Inc.

Moreover, the German service provider has yet to introduce a Web-based network monitoring and reporting service for its customers, O'Boyle said in a written analysis. KPNQwest, Equant and WorldCom all offer online monitoring tools and greater visibility and control over service provisioning to their IP-VPN (IP-virtual private network) customers , she said.

Also, T-Systems doesn't fully own its global IP infrastructure; the company leases capacity from other carriers. This is a disadvantage, O'Boyle said, when competing against AT&T, Equant and WorldCom, which own much of their global network infrastructure and thus have greater control over network reliability and performance.

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